U.S. economy grew at annual rate of 2 percent in third quarter, a sharp slowdown, as pandemic held back recovery
The GDP report, released Thursday by the Bureau of Economic Analysis, offered yet another snapshot of an economy overshadowed by the ongoing pandemic
appear, in some cases, to have intensified. Policymakers at the Fed and the White House have started to acknowledge that inflation is turning out to be lasting longer, and rising higher, than initially expected, saying that prices won’t come down until supply chains have time to clear up.
“It is frustrating to acknowledge that getting people vaccinated and getting delta under control still remains the most important economic policy that we have,” Fed Chair Jerome H. Powell said during a panel discussion at the end of September. “And it’s frustrating to see the bottlenecks and supply chain problems … apparently getting a little bit worse.”
Stubborn supply chain woes are resisting Biden’s remediesToday’s report showed strong signs of an economy returning to 2019-style spending patterns, with more spending on services and experiences like hair salons and travel, and fewer purchases of goods such as new cars, outdoor fire pits and washing machines. headtopics.com
AdvertisementStory continues below advertisementTransportation may be the clearest example yet of this reversal. Spending on automobiles and parts plunged 18 percent in the quarter, going from stratospheric highs earlier in the year to something near its pre-pandemic normal. That sector alone dragged down GDP by 2.4 percentage points -- if automobile sales had remained at record levels, GDP growth this quarter would have come in at about 4.4 percent instead of 2.0 percent.
Meanwhile transportation services, which includes air travel, Lyft and Amtrak, soared 9 percent in the quarter. When the coronavirus hit, consumers slashed about half of their spending on transportation services such as flights and ride-shares. But the sector is now on the way to recovery. Almost half of the respondents to a recent Conference Board survey said they planned to travel in the coming six months — the highest level since the pandemic began.
In Chicago, Sophie Limo Black Car Services fought to stay in business in 2020 as phones rang off the hook with cancellations. Christian Chifor, one of the company’s account managers, said bookings have picked back up over the past few months, mostly with people booking rides for a social night out.
AdvertisementStory continues below advertisementBut there’s a long way to go: Corporate accounts haven’t come back. Chifor said the delta variant held back some business travel that might otherwise have returned. He is also pinched on the other end, as he barely has enough drivers to meet the modest demand, since so many workers left the industry or have yet to return to their old jobs. headtopics.com
“Hopefully things will get better, meaning that some of the drivers will come back, because we cannot survive like this either,” Chifor said. “There’s a lot of angry customers because prices are going up, and we have to limit our business to how much we can do, literally.”Read more: The Washington Post »