(FiveNation.com)- The U.S. economy was a major disappointment in the third quarter, according to data provided this week by the Bureau of Economic Analysis.
In the third quarter, the country’s gross domestic product increased at an annual rate of 2%. That was well short of the what many forecasters were expecting.
In addition, the third quarter GDP growth was significantly less than it was in the first quarter (6.3%) and second quarter (6.7%) of 2021.
There is still a lot of hope for increased growth ahead, but the third quarter performance was certainly a major disappointment for economists who were hoping for better signs that the country was continuing to rebound from the coronavirus pandemic.
The senior economic analyst at Bankrate, Mark Hamrick, commented:
“On the less positive side of the data ledger, the annualized gain in third-quarter GDP was 2%, well below the trend earlier in the year. Even so, that ‘disappointing’ reading is consistent with the U.S. long-term trend, likely only a fairly temporary speed bump caused by the global traffic jam of goods with which we’ve become all too familiar.”
Hamrick hit on a point that could prove to be key to the economy’s performance in the fourth quarter. The retail sector has already ramped up Black Friday deals in advance of the holiday shopping season, in a way preparing for a major shortage of goods as the holidays come closer.
The delivery of those goods will be crucial to retailers. The industry as a whole generally relies on sales from the fourth quarter of the year to “right the ship” and make companies profitable for the year.
If retailers can’t get goods to deliver to customers, then it could spell catastrophe for an industry that’s already been hit so hard by the pandemic.
Many economists believe that the third quarter’s “poor” performance will be short lived, because much of the drop was due to the Delta variant of COVID-19. Deaths and hospitalizations attributed to the variant began to climb in July, and peaked in September.
At the same time, household spending went down considerably, as did a lot of varieties of investments businesses typically invest.
There was a huge uptick in demand in this year’s second quarter, as vaccinations increased and various pandemic-related restrictions were lifted. However, that all reversed course when the Delta variant spiked.
Following the release of the third quarter data, Goldman Sachs lowered its previous 2021 GDP projection down from the 6.2% mark it was at in September to 5.6%.
Another major aspect that is potentially holding the economy back is the job market. The unemployment rate is currently around 4.8%, much higher than it was before the pandemic began.
The U.S. economy also only added roughly 194,000 new jobs last month, with commerce being held back by the Delta variant.
In addition, people are voluntarily quitting their jobs at rates never seen before. That is also contributing to the lack of growth in the GDP.