Trump Economy Fighting Off COVID as US Stocks Near Record High
The United States economy is predicted to make a rebound and crush gross domestic product quarterly growth records in the third quarter of this year.
New projections forecast the U.S. GDP “to grow by around 20% on an annualized basis in the third quarter,” Fortune reported, bouncing back from the GDP decrease of 32.9 percent in the second quarter of 2020.
Economists from S&P Global Ratings predict that the GDP jump will range from 18 percent to 22 percent growth, depending on compromises in Congress over a new stimulus package.
“We’ve been expecting a slower and longer climb back from the bottom, but now with the signs that COVID-19 is not necessarily contained, it’s going to be even slower than that,” chief U.S. economist for S&P Global Ratings Beth Ann Bovino said.
“Even with this [third-quarter] jump, we are still far from climbing out of the hole.”
Morgan Stanley projects a 21.3 percent increase and financial data provider IHS Markit is predicting a 20.1 percent increase in Q3.
If the GDP does rebound as predicted, it would break the current record of 16.7 percent annualized quarterly growth set in Q1 of 1950, according to Fortune.
The economic rebound is not just limited to the GDP.
The Standard & Poor’s 500 nearly broke its record high Wednesday by gaining 46.66 points, or 1.4 percent, The Washington Post reported.
The index narrowly missed its record of 3,386 by six points, about 0.2 percent, that was set in February.
“It briefly topped that level Thursday before falling back,” according to The Post.
The Dow Jones industrial average rose 289.93 points or about 1.05 percent, and the Nasdaq grew by 229.42 points or roughly 2.13 percent.
“Economic data, while still at dire levels, is starting to show signs of stabilization, which, combined with a better than expected earnings season, is further fueling investor optimism despite an incredibly uncertain backdrop,” Nicole Tanenbaum of Chequers Financial Management told The Post.
Tanenbaum added that financial support from the federal government has helped spark the economic rebound.
Individual investors with 401(k) retirement plans are also more optimistic, according to Michael Farr, president of Farr, Miller & Washington. However, there is still a contrast between Wall Street conditions and what businesses and households have faced throughout the pandemic.
“We have seen this separation and disconnect that has been disconcerting to some investors where share prices continue to rise but the economic data and an economic recovery remains tepid,” Farr told The Post.
“You’re coming up on all-time highs when you still have 10 percent unemployed — that’s a huge deal.”
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