Americans may be preparing for the holidays, but economists are looking to January, trying to analyze a raft of new data points to clarify what lies beyond 2020.
The picture is murky at best and there are growing concerns that the uncontrolled outbreak of the Coronavirus could undermine the slow recovery.
The new economic data is good, but that is before the United States and Europe work again to tighten restrictions despite the emergence of several effective vaccines.
The growth of the US economy was recorded 33.1% in the third quarter, which is the highest on record. Consumer spending in the US increased by 40.7% during the period from July to September, US exports jumped 60.5%, and imports increased by 93.1%.
But other data is flashing red. One of the warning signs is the weekly jobless claims, which jumped to a higher than expected level of 778,000 last week, the second consecutive weekly increase.
Economists said that the rotation of workers who have exhausted government unemployment benefits, and the exit from programs to emergency epidemic programs indicates that more job losses in the spring and summer seasons are becoming permanent, as the high numbers of Coronavirus cases nationwide pushed businesses and schools to close.
Renewed lockdowns could be devastating for workers whose safety net will vanish from the pandemic in just weeks.
The Epidemic Emergency Unemployment Compensation Program ends the day after Christmas, and the Epidemic Unemployment Assistance Program, which provided unemployment benefits to temporary workers and others not normally covered by state programs, ends on December 31.
“A lot of this data is really starting to slow and is becoming alarming,” said David Wagner, portfolio manager at Aptus Capital Advisors.
He added, "There is a lot of data released today and yesterday and may show more signs of slowing growth in the fourth quarter, and perhaps even the first quarter."
GDP for the third quarter grew by 33.1 percent, matching estimates released last month.
The Ministry of Commerce said that there were some progressive adjustments in investments and exports, but the gains were offset by cuts in state and local government spending, investment in private stocks and personal consumption.
Economic output benefited in the third quarter from higher durable goods prices, manufacturing showed good gains, and the massive jump in GDP for the third quarter came after a quarter in which economic activity declined by 31.4%.
Household spending is holding up for the time being, growing 0.5 percent in October, but the Commerce Department said personal income, disposable income and savings are down.
A potential upside is that worsening economic conditions could spur Congress to move more quickly on the stimulus package.
Another bad warning to the US economy is that consumer confidence declined in November, mainly driven by the growing negativity in the future outlook.
Even Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a research note that spending in November could contract directly for the first time since April.
"We hope that the increase in spending on commodities will be sufficient to compensate for the weakness in discretionary services, especially entertainment and hospitality," he said. "Consumer spending is losing its momentum in the face of the third wave of Covid," he added.
But the hope is that the vaccine campaigns will start soon, and the goal of the United States of America is to get the largest possible number of its citizens to the vaccine, especially vulnerable groups, but the process may take time, and the vaccine questioning campaigns continue and undermine the process of fighting the virus.
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