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Q3 GDP estimate gets a slight upgrade to 33.4% growth

FILE - A woman carries a shopping bag while walking past a cosmetics store, right, near Faneuil Hall, behind left, Monday, Sept. 28, 2020, in Boston. The U.S. economy expanded at a 33.4% annual pace from July through September, the Commerce Department said Tuesday, Dec. 22, 2020 delivering the last of three estimates on the economys third-quarter performance. (AP Photo/Steven Senne, file) (Copyright 2020 The Associated Press. All rights reserved)

WASHINGTON – The U.S. economy expanded at a record 33.4% annual pace from July through September, the Commerce Department said Tuesday, delivering the last of three estimates on the economy’s third-quarter performance. But it's likely that a resurgence in coronavirus cases slowed growth sharply during the last three months of 2020.

The July-September growth spurt — upgraded slightly from Commerce’s previous estimate of 33.1%, announced last month -- marked a sharp recovery from the second quarter’s 31.4% drop, the worst in records dating back to 1947. The American economy went into freefall when the pandemic hit hard in mid-March.

Consumer spending surged at an annual rate of 41% and private investment sht up by 86.3% to lead the third-quarter rebound.

Employers slashed 22 million jobs in March and April, then began to steadily recall furloughed workers. But the United States is still 9.8 million short of the jobs it had February, and hiring has slowed every month since June.

But an uptick in new COVID-19 cases -- now averaging about 220,000 a day, up from fewer than 35,000 in early September -- is causing governments to issue lock down orders and keeping Americans at home to avoid infection.

Growth in gross domestic product -- the broadest measure of economic output -- is expected to slow to just 2.8% in the fourth quarter, according to the Conference Board, a business research group.

The outlook would have been bleaker if Congress hadn't passed a $900 billion economic relief package that includes $600 direct stimulus payment to most Americans, an extra $300 a week in unemployment benefits and new subsidies for hard-hit businesses and renters facing eviction.