Hampered by rising COVID-19 cases and persistent supply shortages, the U.S. economy slowed sharply to a 2% annual growth rate in the July-September period, the weakest quarterly expansion since the recovery from the pandemic recession began last year, according to an Associated Press report.
Thursday’s (Oct. 28) report from the Commerce Department estimated that the nation’s gross domestic product — its total output of goods and services — declined from robust growth rates of 6.7% in the second quarter and 6.3% in the first quarter.
The 2% annual growth last quarter fell below expectations and would have been even weaker if not for a sharp increase in restocking by businesses, which added whatever supplies they could obtain. Such inventory rebuilding added 2.1 percentage points to the quarter’s modest expansion.
By contrast, consumer spending, which fuels about 70% of overall economic activity, slowed to an annual growth rate of just 1.6% after having surged at a 12% rate in the previous quarter.
Economists remain hopeful for a bounce-back in the current October-December period, with confirmed COVID cases declining, vaccination rates rising and more Americans venturing out to spend money. Most economists think GDP is rebounding to an annual growth rate of 6% or more this quarter.