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October 30, 2020US GDP 2020 Q3 (ADVANCE ESTIMATE) 
The Bureau of Economic Analysis (BEA) has released the Q3 2020 US Real Gross Domestic Product (GDP) advance estimates. The US economy grew 33.1 per cent in Q3 after the decline of 31.4 per cent (seasonally adjusted annualized rate, chained 2012 dollars) in Q2 2020. The increase in Q3 reflect business reopening and resumed activities after more severe COVID-19 restrictions in Q2. BEA also noted that the full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate because the impacts are generally embedded in source data and cannot be separately identified. The US economy in Q3 2020 was 2.9 per cent smaller than in Q3 2019.
Increases in GDP in Q3 came from positive contributions from personal consumption, private inventory investments, exports, non-residential and residential investments. Government spending was down at the federal and state and local levels.
Personal consumption expenditures increased 40.7 per cent in Q3 (in real terms at an annualized rate) following decreases of 33.2 per cent in Q2 and 6.9 per cent in Q1. Services growth was led by increases in health care and food services and goods were up from sales of motor vehicles and parts and clothing and foot wear. Personal consumption expenditure was 2.9 per cent smaller in Q3 2020 compared to Q3 2019.
Residential investment activity was up 12.3 per cent in Q3, mainly reflecting increases in brokers' commission and ownership transfer costs, and was 6.6 per cent above Q3 2019 levels. Non-residential fixed investment increase was led by the increase in transportation equipment.
Exports growth was 59.7 per cent in Q3 (real terms at annualized rates) after the declining 64.4 per cent in Q2 and 9.5 per cent in Q1. Increases in vehicles, engines and parts and capital goods were recorded. Compared to Q3 2019, goods exports were 9.3 per cent lower and service exports were 24.0 per cent lower in Q3 2020.
US nominal GDP increased 38.0 per cent in Q3 following the declines of 32.8 per cent in Q2 and 3.4 per cent in Q1. The personal consumption expenditure price index increased 3.7 per cent compared to the 1.6 per cent decrease the previous quarter.
A seasonally adjusted annualized rate shows what the percent change would be if the quarterly rate continued for four quarters. It is computed by compounding the quarterly rate for four quarters. Reporting annualized rates facilitates comparability between annual and quarterly growth, but can exaggerate change when series are volatile. The COVID-19 shocks do not indicate a contraction of US GDP by 33.2 per cent in Q2 or expansion of 33.1 per cent in Q3. It would take four quarters of compounded contraction or expansions at the same pace as reported for the US GDP to change by that amount. Real GDP contracted 9.0 per cent in Q2 2020 compared to Q2 2019 and real GDP contracted 2.9 per cent in Q3 2020 compared to Q3 2019.
Source: US Bureau of Economic Analysis
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