Real GDP increased at a seasonally adjusted annual rate of 33.1% during the third quarter of 2020, according to the Bureau of Economic Analysis’s “advance” estimate. Real GDP decreased 32.1% in the second quarter of 2020.
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 of data limitations.
Real GDP increase in the third quarter was a result of positive contributions in personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, and residential fixed investment These were partly offset by federal government and state and local government spending.
Consumption rose in the third quarter, adding 25.27 percentage points (pp) to growth, up from a 24.01 pp subtraction during the second quarter of 2020. Inventories grew, following 5 consecutive quarters of subtraction, adding 6.62 pp from GDP. Residential investment added a total of 2.09 pp to GDP.
Business investment rose, after five consecutive quarters of decline, adding 2.88 pp to GDP growth. Investment in structures and intellectual property products continued to decline while investment in equipment added 3.34 pp.
Government spending fell, subtracting 0.68 pp from GDP. The federal government subtracted 0.39 pp while state and local governments subtracted 0.30 pp.
Read the BEA release.