U.S. GDP rebounded 33% in Q3 - RBC Financial Group

According to ActionForex, analysts at RBC Financial Group note that the U.S. Q3 GDP rose 33% (annualized) after a 31% drop in Q2, but expect the pace of recovery to slow going forward.

"The 33.1% (annualized) jump in Q3 GDP was broadly in line with expectations. The rise only partially retraces 31.4% and 5.0% declines in Q2 and Q1, respectively, leaving activity running 3.5% below its pre-shock (Q4/2019) level. The data nonetheless confirms that the initial bounce-back in activity from the spring COVID-19 related shutdowns was quicker than feared. Consumer spending bounced back 41% after falling 33% in Q2. Residential investment surged almost 60% on a bounce-back in housing markets over the summer. Business investment rose overall, boosted by machinery & equipment purchases. But nonresidential investment in structures was one remaining soft-spot, declining another 14.6% in Q3. Oil & gas exploration activity (unsurprisingly given low oil prices) fell sharply. And declines in investment in office buildings, restaurants, etc. will not quiet concerns about commercial property markets."

"And the pace of recovery is expected to slow going forward. Labour markets are still exceptionally soft. Employment has been lagging the GDP recovery (the job count was still down 6 1/2% from year-ago levels at the end of Q3). A larger share of those still off work are on permanent rather than a temporary layoff, and so will likely take longer to match with new jobs. Household incomes remain elevated thanks to remaining government support programs - disposable incomes were still up almost 8% from a year ago in Q3 despite the expiry of $600/week federal top-up unemployment insurance payments at the end of July."