After a disastrous economic contraction in the second quarter, the US economy has rebounded, showing growth of 7.4% in the 3rd quarter of 2020 compared with the previous period. Growth was driven by an increase in both personal consumption and investment.
While this is welcome news, when comparing real GDP in Q3 of 2020 with GDP in Q4-2020, it is still down by 3.4%. This shows that even though this past quarter’s performance was exemplary, it was still not enough to make up for the losses suffered in the first half of the year.
According to a Reuters report, over half of the 22.2 million jobs lost during the pandemic have been recovered. Unemployment claims have also gone down by 5% yet they remain above the historic high seen during the Great Recession by 19%.
Retail sales in the United States were up 1.9% in the month of September, with considerable increases in vehicle sales and clothing sales. Non-store retailers have continued their historic growth this year. Their sales for the month of September were 24% higher than the total for September 2019. Sales for food services and drinking places remain 14% lower than in September 2019.
This lower consumption in restaurants looks poised to remain the same for the next few months. Raising levels of COVID-19 infections make the opening of restaurants and bars nationwide seem unlikely.
The effect that this pandemic has had on brick-and-mortar retailers could be disastrous without further stimulus. Spending that would have gone towards them has shifted towards online retailers such as Walmart and Amazon. Furthermore, a Washington Post article indicates that there has been a shift in consumption from good towards services. While these could rebound once a vaccine is rolled out, their continued survival could be at risk.