Speed Reads

'a lot of damage'

U.S. economy slows to 2 percent annual growth in 3rd quarter amid Delta surge

The U.S. economy grew at a slower annual rate in the third quarter of 2021 as the Delta variant of COVID-19 drove an uptick in coronavirus cases. 

The Bureau of Economic Analysis said Thursday the economy grew at a 2 percent annual rate from July to September, down from 6.7 percent from the quarter prior, The Washington Post reports. This represented the slowest gain since the second quarter of 2020, which saw GDP plunge 31.2 percent, according to CNBC

The numbers came after the most recent U.S. jobs report for September disappointed, with 194,000 jobs being added compared to the 500,000 expected by economists. Thursday's report showed that consumer spending grew at an annual rate of 1.6 percent in the third quarter of 2021 compared to 12 percent in the second quarter, The Associated Press reports.

"The Delta wave of the pandemic did a lot of damage — it caused consumer to turn more cautious," Moody's Analytics chief economist Mark Zandi said, per AP. "The virus surge scrambled global supply chains and disrupted production in a lot of industries and also created havoc in the job market." 

At the same time, with new COVID-19 cases declining, former Congressional Budget Office chief economist Wendy Edelberg told the Post that "my hope is that to the degree we're seeing bad news in the report, it is going to be temporary factors driven by Delta." Indeed, Credit Union National Association senior economist Dawit Kebede said that "as Delta cases continue to subside, there may be more growth in the fourth-quarter as consumers will be more willing to spend on services involving in-person interactions," per CNBC. Still, Kebede noted "the supply chain challenges, however, will likely continue until next year making it difficult to satisfy increased consumer demand."