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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

The biggest pandemic labor market drags

Data: U.S. Bureau of Labor Statistics; Chart: Naema Ahmed/Axios

State economies most exposed to industries that have been slow to bounce back from the pandemic shutdown — like tourism — are seeing the worst labor market pain.

Why it matters: Even states that have the coronavirus more under control than others are taking harder economic hits, thanks to their dependence on sectors slammed by the pandemic.

1 hour ago - Sports

The end of COVID’s grip on sports may be in sight

Illustration: Aïda Amer/Axios

Packed stadiums and a more normal fan experience could return by late 2021, NIAID director Anthony Fauci said yesterday.

Why it matters: If Fauci's prediction comes true, it could save countless programs from going extinct next year.

Trump's 2024 begins

Trump speaking to reporters in the White House on Thanksgiving. Photo: Erin Schaff - Pool/Getty Images

President Trump is likely to announce he'll run again in 2024, perhaps before this term even ends, sources tell Axios.

Why it matters: Trump has already set in motion two important strategies to stay relevant and freeze out other Republican rivals. 

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