Economists throw cold water on Q3 GDP expectations
Tomorrow's GDP report is poised to be one for the record books, but economists warn that the numbers are likely to be deceiving.
What we're hearing: “The GDP is likely to catch a lot of attention tomorrow as we expect a historic 29.5% growth annualized," says Beth Ann Bovino, S&P Global's chief U.S. economist.
- "But, while growth is welcomed, we are nowhere near home yet. We need to regain almost 40% of the $1.85 trillion lost to get back to pre-crisis GDP levels seen in 4Q 2019.”
Be smart: Brookings Institution nonresident senior fellow Jay Shambaugh warns that because GDP is typically reported at an annualized pace, the numbers "can be a bit misleading." And further, "rapid third quarter growth does not mean the economy has strong momentum now."
- "Third quarter growth measures the average level of output in July through September compared to the average in April through June."
- "The very low level of output in April and May set a low baseline, meaning almost any bounce back at all would generate a huge growth rate for the third quarter."