The figures, the last snapshot of the USA labour market ahead of Tuesday's election, underscore a further, yet gradual, recovery in the job market.
Despite the Q3 jump, the USA economy remains about 3.5% smaller than a year ago.
A separate report from the Labor Department on October 29 also showed that 751,000 people filed for state unemployment benefits in the week ending October 24, a drop of 40,000 from the previous week and the lowest since the lockdowns delivered their colossal blow to the economy in March. "That is terrific but not enough to get us out of the hole that COVID dug, while risks of a set back have surged w/new cases".
A Trump thought bubble, from Axios' Alayna Treene: The economy is still the president's #1 message ahead of the election, and his team was always going to try to portray this last report as a win for the administration. Most states are already ahead of where they were at the start of the year, but unfortunately the economy of NY and a few other states are lagging far behind the rest of the nation.
Markets reacted positively to the news, with Wall Street erasing a loss at the open and turning mostly positive.
Former Vice President Joe Biden argued that it showed the country is "in a deep hole, and President Trump's failure to act has meant that Q3 growth wasn't almost enough to get us out", saying the recovery "is slowing if not stalling".
Overhanging the economy now are growing uncertainty and worry as a resurgence of the virus raises the prospect of new lockdowns and threatens the economy, especially without more federal help. Despite the jump, the latest data shows the United States isn't out of the woods yet.
But the recovery is expected to slow already in the final quarter, partly as a result of statistical "base effects" but also due to the pre-election politics of Washington lawmakers who allowed financial support programmes and safety nets for households to lapse with the July month.
Vehicle sales were particularly strong, as were clothes and shoes. Output is 3.5% below of its level in the fourth quarter.
"This is a remarkable rebound considering that unemployment remains high, at 7.9% in September, compared with 3.5% at the start of the year", said Caitlin Birch, global economist at the Economist Intelligence Unit.
"We will have recovered about 2/3 of the GDP we lost in the recession", Moody's Analytics Chief Economist Mark Zandi told CNBC on Thursday. "Without more stimulus, there will not be as much of a foundation to rebuild on, once the crisis passes".
The third-quarter rise spanned most categories.
The Bureau contributed the GDP increase to reopening of business and resuming of activities that were restricted at the height of the coronavirus pandemic.
Record low interest rates boosted housing. Absent annualization, the economy grew at 7.4 percent in the third quarter, by far the largest quarterly gain in records that began just after World War II.
It followed a record shrinkage rate of 31.4 per cent in the second quarter of this year, which plunged the USA into its deepest recession since the Great Depression. In the prior three years, GDP expanded on average by 2.6% a year, a solid pace close to the economy's potential. But he warned that the job market might not fully recover until perhaps 2023.
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