It was always likely that the figure for economic growth in the third quarter of 2020, announced Thursday, would be huge.
It was also certain that the gross domestic product statistic would garner an immense amount of public attention, given that it's the last economic estimate to be released before Tuesday's election, and previous quarterly estimates have been so dismal.
True on both counts. The Bureau of Economic Analysis placed its preliminary estimate of the annualized rate of growth for the third quarter ended Sept. 30 at 33.1%. That's a historic figure.
President Donald Trump and his acolytes are sure to be out in force, declaring the number to be certification of the wisdom of Trump's economic policies.
Trump took out advance advertisements on Facebook even before the release, according to the Financial Times, bragging that the GDP number would be "the highest in American history."
He should put a sock in it. Here's why.
First, the headline number of 33.1% is intrinsically misleading — it's an annualized rate, meaning that it's how fast the economy would grow if the actual third-quarter figures were extended out to a whole year. In truth, the economy grew by only 7.4% in the third quarter.
Moreover, either way you take it — whether as an annualized rate or the actual GDP change for the quarter — it must be considered in the context of previous changes in the size of the economy.
In the second quarter ended June 30, the U.S. economy was reported to have shrunk by a historic 9.46% (or 31.4% on an annualized basis). So Thursday's 7.4% still doesn't bring us back to where the economy was before the pandemic struck.
"All told, the economy is -3.5% smaller than it was at the end of 2019," economist Justin Wolpers of the University of Michigan tweeted. "The economy is roughly as far below its peak as in the darkest days of the last recession."