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U.S. Economy Grew At A Record Pace In Third Quarter

MARY LOUISE KELLY, HOST:

After a chaotic spring and uncertain summer, the workers and businesses that make up the U.S. economy are learning to adapt to this pandemic reality.

ARI SHAPIRO, HOST:

Nicole Wolter heads a manufacturing company with about 20 employees in northwest Illinois. It supplies food makers, among other things. She's actually expecting an increase in sales this year.

NICOLE WOLTER: We've been keeping steady, keeping busy. The only thing that's been somewhat of a hassle is keeping everyone safe.

KELLY: Others have not done as well. Sally Noble (ph) lost her job at a Massachusetts brewpub this spring. Her boyfriend was also laid off for a time, but he eventually found a new job that allows him to work from home.

SALLY NOBLE: I've been facing challenges, but I know that it's a drop in the bucket compared to some of the other challenges people are having to face during this time - living month to month, paycheck to paycheck or unemployment check to unemployment check.

SHAPIRO: These are the stories that make up the economic figures we get each week. Today, for instance, we learned that more than a million people filed new claims for unemployment last week. At the same time, the government says the U.S. economy grew at a record pace during the last three months. Here to help us untangle these sometimes contradictory threads is NPR's Scott Horsley. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good afternoon, Ari.

SHAPIRO: So let's start with that report from the Commerce Department on economic growth. What does it tell us?

HORSLEY: The report says the economy grew by nearly 7.5% during July, August and September. Now, that's after shrinking by 9% during the spring, when the pandemic pushed us into lockdown. The Commerce Department typically reports those numbers in annualized terms, so you might have heard that the economy grew in the third quarter by 33.1%. Anyway, we saw a record collapse of the economy in March and April and then a record rebound over the summer. This is the last big economic yardstick we'll get before the election next week. And not surprisingly, there's some crowing over at the White House, where Tyler Goodspeed is an economic adviser.

TYLER GOODSPEED: This was the biggest gain in U.S. history by a factor of two. And it was also just an outperformance of what we were expecting, not only yesterday but also what we were expecting three months ago and certainly six months ago.

HORSLEY: Goodspeed says that strong comeback is a testament both to the strength of the economy before the pandemic and the really extraordinary effort back in March to pump federal dollars into the economy with supplemental unemployment benefits, help for small businesses and those $1,200 relief checks that went out to a lot of Americans.

SHAPIRO: So a steep drop in the spring and a strong comeback in the summer. Where does that leave us now in the fall?

HORSLEY: The economy is still about 3.5% smaller than it was before the pandemic hit. So it's on the mend, but it hasn't healed yet. B.J. Parrott has been on that roller coaster. She runs a manufacturing company in Milwaukee.

B J PARROTT: At first, it was kind of a panic freeze. And now as people have gotten used to the protocols and the extra safety, it's kind of coming back. Toward the end of September, we were about 75% of what we were last year in terms of sales, which I think was pretty good.

HORSLEY: In general, manufacturing companies have done pretty good. Parrott's company has a dozen employees in a 32,000-square-foot factory. So it's easy enough for them to keep their social distance. Businesses that rely on bringing people together, on the other hand, like airlines and nightclubs and restaurants, they're having a much tougher time. The brewpub that laid Sally Noble off in Massachusetts is still in business selling takeout beers, but Noble wonders when or if we're ever going to get back to seeing the pub as a gathering place.

NOBLE: I loved that beer cafe vibe where you see people you know, and you can have a conversation and meet new people. You know, I'd love to say I'm optimistic. I'm more just curious what all of that's going to look like in a year or two.

HORSLEY: And you can underscore that question as we come into the winter months and we're seeing a fresh spike in coronavirus infections.

SHAPIRO: Yeah, what does all that mean for the next few months economically speaking?

HORSLEY: Forecasters say we're likely to see slower growth in the fourth quarter of the year. We've already seen a slowdown in hiring in recent months. And the pent-up demand that powered a lot of spending in the third quarter is now gone. Also gone is a lot of that federal relief money. And then, of course, the virus itself is still a wild card. You know, Parrott says her employees have been really careful about not going out after work and putting themselves and their families at risk, but it is a challenge.

PARROTT: I know Milwaukee just reinitiated a lot of restrictions on how many people can be in bars and taverns and restaurants and stuff because Wisconsin is one of the hot spots for COVID.

HORSLEY: As we've said all along, Ari, a sustained economic recovery is going to depend on getting control of this pandemic.

SHAPIRO: NPR's Scott Horsley. Thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.