US: Growth slowed sharply in the third quarter

The slowdown in growth is stronger than expected, with analysts expecting 2.4%. (Photo: 123RF)

Washington, D.C. — Gross domestic product growth slowed sharply in the United States in the third quarter, weighed down by the delta-type of COVID-19 and global shortages, as Joe Biden struggles to negotiate his social spending plan for long-term growth.

From July to September, GDP growth was 2%, year on year, according to the Commerce Department’s first estimate released Thursday.

That’s three times lower than it was in the second quarter when it jumped to 6.7%. The slowdown is stronger than expected, with analysts expecting 2.4%.

“The emergence of COVID-19 cases has led to the emergence of new restrictions and delays in the reopening of establishments in certain regions of the country,” the Commerce Department details in its press release.

The US prefers GDP to develop at an annual rate, compared to the previous quarter, and then expects to develop over the entire year at that rate. However, the calculation method varies by country.

Thus, the US growth is 0.5% if we simply compare with the previous quarter, which is a calculation method used for example by the countries of the eurozone, which will publish their growth on Friday. French GDP is expected to rise by 2.7%, according to this calculation.

Other countries like China prefer to compare the quarter against the same quarter of the previous year. The US GDP grew by 4.9% according to this calculation, versus 4.9% for China, which saw its growth slow.

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The US economy regained its pre-epidemic size in the second quarter, driven by the vaccination of a large part of the population.

But over the summer, the highly contagious COVID-19 Delta slowed down, affecting appetite for restaurants, planes and hotels, among other things.

In addition, many sectors have suffered for months from global supply difficulties, causing delivery delays and even shortages.

Combined with strong demand from American consumers, these disruptions are driving up prices.

On the other hand, inflation slowed to 5.3% on an annual basis from 6.5% in the second quarter, the Commerce Department reported Thursday. In the second quarter, the inflation rate was 6.5%.

Excluding volatile food and energy prices, the so-called core inflation is also lower, at 4.5%, versus 6.1% between April and June.

On Thursday, Joe Biden will announce the new lines of his “historic” social and environmental spending plan, which should ensure long-term growth and jobs.

However, the envelope was greatly reduced compared to his initial ambitions, in order to bring together all parties of the Senate Democrats, a sine qua non for its adoption without a Republican vote.

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