The U.S. economy grew the most on record over the third quarter as trillions of coronavirus relief from Congress and the Federal Reserve supported household and business spending.
Third quarter GDP growth was pegged at 33.1% on an annualized basis, the largest three-month increase on record and just ahead of the 32% surge that was forecast by economists and the final 31.4% decline -- another record -- tallied for the three months ending in June.
Weekly jobless claims also improved, according to Commerce Department data published alongside the GDP estimate, with 751,000 Americans filing for unemployment benefits last week, down from the upwardly-revised reading of 791,000 for the prior period.
The gains, however, still leave the broader economy notably weaker than at the start of the coronavirus pandemic, with more than 10.7 million jobs lost.
"In order fully to reverse the fall in GDP in the first and second quarters, the third quarter needs to grow at a 45.7% annualized rate," said Ian Shepherdson of Pantheon Macroeconomics. "In order to put GDP back onto the path which could reasonably have been expected in the absence of Covid, third quarter growth would have had to be about 63%."
"The slowdown we expect to see in the fourth quarter won't be due entirely to the absence of favorable base effects and the sharp drop in government transfer payments," he added "It also will reflect people's changing behavior in the face of surging Covid-19 cases."
U.S. equity futures showed a modest bounce higher following the data releases, with contracts tied to the Dow Jones Industrial Average indicating a 30 point opening bell gain and those linked to the S&P 500 suggesting a 10 point bump higher for the broader benchmark.
CARES Act spending, which totaled $2.2 trillion, was a major component of the third quarter gains, as was the Federal Reserve's ongoing increase in financial market support, which has swelled the central bank's balance sheet past the $7 trillion mark.
Consumer spending surged 40.7%, the Commerce Department said, but hasn't yet offset the 33.2% slump recorded over the second quarter. Business investment was estimated 20.3% higher, following a 27.3% contraction in Q2, while housing investment roared 59.3%.