COVID-19 Impact on the Third-Quarter 2020 GDP Estimate
The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.
Real gross domestic product (GDP) increased at an annual rate of 33.4 percent in the third quarter of 2020, according to the "third" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent.
The increase in real GDP reflected increases in PCE, private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program
loans) and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in November on a seasonally adjusted basis after being unchanged in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.
The seasonally adjusted increase in the all items index was broad-based, with no component accounting for more than a quarter of the increase. The food index declined in November, as a decrease in the food at home index more than offset a small increase in the food away from home index. The index for energy rose in November, as increases in indexes for natural gas and electricity more than offset a decline in the index for gasoline.
The index for all items less food and energy increased 0.2 percent in November after being unchanged the prior month. The indexes for lodging away from home, household furnishings and operations, recreation, apparel, airline fares, and motor vehicle insurance all increased in November. The indexes for used cars and trucks, medical care, and new vehicles all declined over the month.
The all items index rose 1.2 percent for the 12 months ending November, the same increase as for the period ending October. The index for all items less food and energy rose 1.6 percent over the last 12 months, also the same increase as the period ending October. The food index rose 3.7 percent over the last 12 months, while the energy index fell 9.4 percent.
Next release is Thursday, January 13, 2021, for the December 2020 Consumer Price Index.
Total nonfarm payroll employment rose by 245,000 in November, and the unemployment rate edged down to 6.7 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. However, the pace of improvement in the labor market has moderated in recent months
In November, the unemployment rate edged down to 6.7 percent. The rate is down by 8.0 percentage points from its recent high in April but is 3.2 percentage points higher than it was in February. The number of unemployed persons, at 10.7 million, continued to trend down in November but is 4.9 million higher than in February.
Employment in transportation and warehousing rose by 145,000 in November but is 123,000 below its February level. In November, employment rose by 82,000 in couriers and messengers and by 37,000 in warehousing and storage; since February, employment in these industries has increased by 182,000 and 97,000, respectively. Job growth also occurred over the month in truck transportation (+13,000).
In November, employment in professional and business services increased by 60,000, with about half the gain occurring in temporary help services (+32,000). Job growth also occurred in services to buildings and dwellings (+14,000). Employment in professional and business services is down by 1.1 million since February.
Health care added 46,000 jobs in November, with gains occurring in offices of physicians (+21,000), home health care services (+13,000), and offices of other health practitioners (+8,000). Nursing care facilities continued to lose jobs (-12,000). Health care employment is 527,000 lower than in February.
Construction gained 27,000 jobs in November, but employment is 279,000 below its February level. In November, employment rose in residential specialty trade contractors (+14,000) and in heavy and civil engineering construction (+10,000).
In November, manufacturing employment increased by 27,000. Job gains occurred in motor vehicles and parts (+15,000) and in plastics and rubber products (+5,000). Employment in manufacturing was 599,000 lower than in February.
Financial activities added 15,000 jobs in November. Gains occurred in real estate (+10,000) and in nondepository credit intermediation (+8,000). Financial activities has added 164,000 jobs over the past 7 months, but employment in the industry is 115,000 lower than in February.
Employment in wholesale trade continued to trend up in November (+10,000) but is 281,000 lower than in February.
Government employment declined for the third consecutive month, decreasing by 99,000 in November. A decline of 86,000 in federal government employment reflected the loss of 93,000 temporary workers who had been hired for the 2020 Census. Employment in local government education continued to trend down (-21,000).
In November, retail trade lost 35,000 jobs, reflecting less seasonal hiring in several retail industries. Employment decreases occurred in general merchandise stores (-21,000); sporting goods, hobby, book, and music stores (-12,000); electronics and appliance stores (-11,000); and health and personal care stores (-8,000). By contrast, furniture and home furnishings stores and automobile dealers added 6,000 jobs and 4,000 jobs, respectively. Employment in retail trade is 550,000 lower than in February.
Employment in leisure and hospitality changed little in November (+31,000) but is down by 3.4 million since February. Arts, entertainment, and recreation added 43,000 jobs in November, while employment in food services and drinking places changed little (-17,000).
Employment in other major industries, including mining, information, and other services, showed little change in November.
The average workweek for all employees on private nonfarm payrolls remained unchanged at 34.8 hours in November. In manufacturing, the workweek decreased by 0.2 hour to 40.3 hours, and overtime decreased by 0.1 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.2 hours.
The full BLS press release on the November 2020 employment situation can be accessed in the link below:
The next Employment Situation for December 2020 is scheduled to be released on Friday, January 8, 2021.
The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October on a seasonally adjusted basis after rising 0.2 percent in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.
Component indexes were mixed, with many offsetting increases and decreases. The food index rose 0.2 percent, with the food away from home index increasing by 0.3 percent and a smaller 0.1-percent rise in the food at home index. The energy index rose 0.1 percent in October as the index for electricity increased 1.2 percent.
The index for all items less food and energy was unchanged in October following an increase of 0.2 percent in September. The index for shelter increased 0.1 percent in October, which was offset by a 0.4-percent decrease in the index for medical care. The indexes for airline fares, recreation, and new vehicles were among those to rise, while the indexes for motor vehicle insurance, apparel, and household furnishings and operations declined.
The all items index rose 1.2 percent for the 12 months ending October, a slightly smaller increase than the 1.4-percent rise for the 12-month period ending September. The index for all items less food and energy rose 1.6 percent over the last 12 months after rising 1.7 percent in September. The food index increased 3.9 percent over the last 12 months, while the energy index declined 9.2 percent.
Next release is Thursday, December 10, 2020, for the November 2020 Consumer Price Index.
Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020 (reflecting the July through September time frame), according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent. The quarterly increase was +7.4%--reflecting a record increase following the previous quarter’s record decline. The annualized rate of GDP increase assumes that the pace of the economy’s recovery in the most recent quarter is maintained over the course of the year. With these initial GDP results for the July through September quarter, the U.S. economy’s output remained roughly 3.5% smaller at the end of the September quarter than it was at the end of calendar year 2019.
The Commerce Department reported that the increase in real GDP during the July through September period reflected increases in personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans) and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The Commerce Department reported that the increase in PCE reflected increases in services (led by health care as well as food services and accommodations) and goods (led by motor vehicles and parts as well as clothing and footwear). The increase in private inventory investment primarily reflected an increase in retail trade (led by motor vehicle dealers). The increase in exports primarily reflected an increase in goods (led by automotive vehicles, engines, and parts as well as capital goods). The increase in nonresidential fixed investment primarily reflected an increase in equipment (led by transportation equipment). The increase in residential fixed investment primarily reflected an increase in brokers’ commissions and other ownership transfer costs.
The price index for gross domestic purchases increased 3.4 percent in the third quarter, in contrast to a decline of 1.4 percent in the hard-hit April to June quarter. The PCE price index increased 3.7 percent, in contrast to a decrease of 1.6 percent last quarter. Excluding food and energy prices, the PCE price index increased 3.5 percent, in contrast to a decrease of 0.8 percent.
Current-dollar personal income declined by $540.6 billion in the third quarter, in contrast to an increase of $1.45 trillion in the second quarter. The decrease in personal income was more than accounted for by a decrease in personal current transfer receipts (notably, government social benefits related to pandemic relief programs) that was partly offset by increases in compensation and proprietors’ income. The Commerce Department noted that additional information on several factors impacting personal income can be found in “Effects of Selected Federal Pandemic Response Programs on Personal Income.” Personal saving was $2.78 trillion in the third quarter, compared with $4.71 trillion in the second quarter. The personal saving rate—personal saving as a percentage of disposable personal income— was 15.8 percent in the third quarter, compared with 25.7 percent in the second quarter.
The full Commerce Department press release on the second estimate of second quarter GDP can be accessed in the link below.
The next release - for the second estimate of third quarter 2020 GDP - will be released on November 25, 2020.