Blowout US economic growth in summer is already fading

WASHINGTON (AP) — Americans may feel whiplashed by a report Thursday on the economy's growth this summer, when an explosive rebound followed an epic collapse.

The government will likely estimate that the economy grew faster on an annualized basis last quarter than in any such period since record-keeping began in 1947.

Just be forewarned: The sizzling pace won't last.

The economy is weakening and facing renewed threats. Confirmed viral cases are surging. Hiring has sagged. Government stimulus has run out. And even last quarter's outsize growth will leave the economy far below its level before the pandemic struck in March.

“The strength of this figure is an optical illusion,” Nancy Vanden Houten, an economist at Oxford Economics, wrote in a research note. “Growth has since slowed, and we expect markedly weaker activity” in the October-December quarter and beyond

In the last major report on the U.S. economy before Election Day, economists have forecast that growth in the July-September quarter soared to a 31% annual rate, according to data provider FactSet. That would follow a plunge of 31.4% in the April-June period — by far the worst quarterly drop ever — when the eruption of the coronavirus closed businesses and threw tens of millions out of work.

If the analysts' outlook proves roughly accurate, the economy, as of last quarter, will have recovered only a bit more than two-thirds of the output it lost to the pandemic recession. The economy shrank 5% in the first three months of the year.

Mathematically, a bounce-back that equals or even slightly exceeds an earlier drop doesn't mean the economy has fully recovered. The reason is that the rebound comes off a smaller numerical base. To use a simple example: A drop from 100 to 70 is a 30% fall. Yet a 30%...