Delta Wave slowed US economic growth in third quarter
Last updated on: 30 October,2021 03:30 pm
Delta Wave slowed US economic growth in third quarter
WASHINGTON (AFP) - The US economic expansion slowed dramatically in the third quarter to an annual rate of just two percent as consumer spending was choked by resurgent Covid-19 infections, the government said Thursday.
The spread of the Delta variant of the virus over the summer combined with renewed restrictions and global supply snags including shortages of workers and computer chips took a toll on the economy, cutting growth from the 6.7 percent pace in the prior quarter.
The impact on the world s largest economy was most notable in the more than 26 percent collapse in purchases of big-ticket manufactured goods in the latest three months, the Commerce Department reported.
That drop was partly offset by the 7.9 percent increase in spending on services like travel and hotels, though that was slower than the gain in the prior quarter, according to the data.
The "resurgence of Covid-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country," the report said.
The US government has supported the economy with massive stimulus measures including the $2 trillion American Rescue Plan enacted in March, but much of that relief including expanded unemployment benefits have lapsed.
"Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments and social benefits to households all decreased," the Commerce Department said.
Despite the worse-than-expected result in the latest quarter, economists are confident growth will accelerate at the end of 2021.
"Growth was crushed by consumption slowing" as stimulus payments ended, said Ian Shepherdson of Pantheon Macroeconomics
"The Delta wave and the chip shortage -- the latter subtracted nearly three percentage points from consumption growth -- made things much worse," he said in an analysis.
However Shepherdson predicted the fourth quarter "will be very different; spending on services is already rebounding as Delta subsides.