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The U.S. economy grew at a 33.1% annualized pace in the third quarter, the Commerce Department said on Thursday.

The state of play: The record growth follows easing of the coronavirus-driven lockdowns that pushed the economy to the worst-ever contraction — but GDP still remains well below its pre-pandemic level.

  • The economy remains 3.5% smaller than it was at the end of 2019.

Between the lines: The annualized GDP figure assumes the pace the economy grows in the last quarter continues over the year.

  • The economy grew 7.4% on a non-annualized basis — still a record, by that measure.

A Trump thought bubble, from Axios' Alayna Treene: The economy is still the president's #1 message ahead of the election, and his team was always going to try to portray this last report as a win for the administration.

  • But with just five days until Election Day, the report is unlikely to move the electoral needle.

By the numbers: GDP peaked in the fourth quarter of 2019, when it hit an annualized rate of $19.25 trillion (measured in 2012 dollars).

  • The current level — $18.58 trillion — is still well below pre-pandemic levels.

With no extra government stimulus and less generous unemployment benefits in the third quarter, personal income fell by about 2.5%.

  • The personal savings rate fell to 15.8% of disposable personal income — down from the second-quarter peak, but still extremely high by historical standards.

What they're saying: "When you go from having an essentially complete lockdown to opening up, that allows the economy to bounce back a bit like a compressed spring," Nathan Sheets, chief economist at asset management firm PGIM Fixed Income, tells Axios.

  • But "the economy is slowing dramatically" now, says Sheets — pointing to dried-up federal stimulus negotiations and a worsening nationwide coronavirus surge that could weigh on economic growth.
  • "For context, the economy is roughly as far below its peak as in the darkest days of the last recession," said UMich economist Justin Wolfers.

The big picture: It's still too early to tell whether this recovery is V-shaped, W-shaped (a so-called "double dip"), or whether it looks more like a backwards square root sign.

  • While the third quarter saw strong growth, early fourth-quarter data indicate that growth has flatlined in October.

Be smart: Nationwide aggregates hide a lot of variation — a phenomenon often referred to as a "K-shaped recession." Dense blue states are doing worse than open red states; women are doing worse than men; Blacks are doing worse than whites; the poor are doing worse than the rich.

The bottom line: The U.S. economy has clawed back some of its pandemic losses, but still has a long way before a full recovery.

  • And a single backwards-looking GDP figure can conceal more than it reveals.

Go deeper

Jan 27, 2021 - Technology

Facebook stock whipsaws amid ad targeting concerns

Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images

Facebook's stock showed volatility in after-hours trading Wednesday, despite adding users and beating on top and bottom lines.

Why it matters: Investors seem spooked by proposed changes to user data collection by Apple that would impact Facebook's ad business, in addition to perennial threats of new federal privacy regulations.

Home sellers reaped record profits in 2020

Data: ATTOM Data Solutions; Chart: Axios Visuals

People who sold a median-priced home or condo last year made a typical profit of $68,843, the highest figure since at least 2005, according to real estate data provider ATTOM Data Solutions.

Why it matters: While homeownership is still elusive for Americans on bottom income rungs, it's proving to be a slot machine jackpot for the "haves," whose properties have grown more attractive thanks to pandemic lifestyle changes.

Why migrants are fleeing their homes for the U.S.

Illustration: Eniola Odetunde/Axios Photo: Herika Martinez /Getty Images 

Natural disasters in Central America, economic devastation, gang wars, political oppression, and a new administration are all driving the sharp rise in U.S.-Mexico border crossings — a budding crisis for President Biden.

Why it matters: Migration flows are complex and quickly politicized. Biden's policies are likely sending signals that are encouraging the surge — but that's only a small reason it's happening.

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