• US GDP set a record at 33.1% annualized pace in the third quarter.
  • Economy recovers quickly from 31.4% lockdown decline in quarter two.
  • Performance easily surpasses 31% consensus forecast.
  • Business and consumer spending propelled economy forward.
  • Jobless claims fall to 751,000 the pandemic low.
  • Dollar gains across the board on COVID-19 worries.

The US economy roared back from its lockdown collapse with the fastest growth on record even as rising COVID-19 diagnoses and the political stall on a new stimulus package threaten to undermine the fourth quarter.

Economic activity expanded at a 33.1% annual rate in the third quarter, topping the 31.4% negative record of the the third quarter's lockdown contraction, according to the Commerce Department on Thursday. The consensus estimate was for a 31% increase.

Gross domestic product, (GDP) is the widest measure of all goods and services produced in the country. The quickest previous expansion had been the 16.7% surge in the first quarter of 1950.

In a separate release initial jobless claims in the the third week of October dropped to 751,000, the lowest total since the historic rise began in March. Continuing claims fell to 7.756 million, also the lowest of the COVID-19 era.

Markets and the ECB

Equity markets responded to the improved economic news with modest gains after the COVID-19 related sell-off of the last four sessions. The Dow rose 0.52%, 139.16 points to 26,659.11 and the broader S&P 500 added 1.19% to 3310.11. Credit yields also rose on the data with the benchmark 10-year Treasury closing at 0.831% up 5 points on the day.

Currencies saw the dollar with its best daily performance since August. Against the euro the greenback gained three-quarters of a figure, ending at 1.1673 its highest finish since September 25.

European Central Bank President Christine Lagarde's dour assessment of the eurozone economy after the central bank kept its rates and bond purchase programs unchanged and the likelihood that the bank will have to increase its economic support as Germany and France return to partial lockdowns, sent markets scurrying for the safety dollar. The euro is just above its low close for the past three months at 1.1632.

The dollar's increase versus the yen was more moderate and did not threaten the seven-month old descending trend. Due to the Japanese currency's preferred safe-haven status in Asia gains in the USD/JPY were limited to 30 points at 104.62.

The dollar also revalued against the sterling, Swiss franc, and the Australian, New Zealand and Canadian dollars.

Consumer and business spending

Economic growth in the US was bolstered by strong spending in the consumer sector and business investment.

The recoveries in Retail Sales, the Sales Control Group and Durable Goods Orders since April have replaced and then surpassed the declines of the two shutdown months despite the continuing high levels of unemployment and job losses.

Retail Sales gained 30% in the five months from May to September. Including the 22.9% loss of the shutdown months the seven month pace is a remarkable 1.01% average increase.

The Control Group receipts are 8.9.1% higher in the same seven-month period with a 1.27% average. Either performance would be excellent in a healthy consumer and labor market, in the midst of COVID-19 it is remarkable.

Durable Goods Orders have climbed 1.7% in the seven months from March which gives a weak 0.24% average monthly increase. But Nondefense Capital Goods, the business investment analog, is up 3.5% in the same period, a respectable 0.5% monthly rise.

Nondefense Capital Goods ex-Aircraft


Unemployment insurance and stimulus spending

Jobless benefits from Washington and the states have helped to maintain consumption but with the next stimulus bill stalled in election politics, the ability of consumers to maintain these essentially normal levels of spending will come under strain if another relief program is not passed.


The excellent recovery in the United States, much stronger than in the eurozone where quarterly growth is expected at 9.4% in the third quarter after the 11.4% drop from April to June, is threatened by the rising virus diagnoses in many American states.

In the US shutdown decisions are largely in the hands of the 50 state governors and though none so far have reimposed limits, the economic danger is clear and straight ahead.



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD coming up for a breath of air in support

EUR/USD holding up at critical support in the hourly chart. ECB and Fed are in focus with critical data to end the week. The end of the week for European and US markets will bring plenty of key data for which could still some volatility for traders to enjoy. 


GBP/USD wobbles around 1.3800 on Brexit, inflation chatters, UK Retail Sales, PMIs eyed

GBP/USD struggles to extend pullback from monthly high. UK PM Johnson ready to compromise Brexit, NI protocol terms, British covid infections jump. Inflation expectations jump to multi-year high in the UK, US.


Gold flirts with $1,790 hurdle on mixed concerns ahead of US PMI

Gold refreshes intraday high to $1,787 during the four-day run-up amid early Friday. The yellow metal witnessed pullback the previous day amid firmer USD, on relation fears, but the latest sentiment-positive headlines seem to have favored the gold buyers.

Gold News

Bitcoin price flash crash on Binance US sees BTC drop 87% following algorithm error

Bitcoin price reached an all-time high of over $67,000 on October 20 and the bellwether cryptocurrency is starting to retest key support levels. While BTC dropped to roughly $62,000 on most exchanges, traders on Binance US witnessed a flash crash of 87%.

Read more

The idea of inflation falling back by (say) March is a fantasy

We get some non-movers today like the Philly Fed, Sept existing home sales, and leading indicators, but let’s face it, jobless claims own the space. Claims are not behaving as expected and are wildly at odds with job openings. 

Read more