Third Estimate 3Q2020 GDP Improves Marginally To 33.4%. Corporate Profits Improve

The third estimate of third-quarter 2020 Real Gross Domestic Product (GDP) improved from the second estimate's positive 33.1 % to 33.4 %.

Analyst Opinion of GDP

The coronavirus recovery is the reason for the improvement from the previous quarter - and pushed GDP quarter-over-quarter growth to record levels.

I am not a fan of the quarter-over-quarter exaggerated method of measuring GDP - but the recovery from the pandemic is not over as the year-over-year GDP growth remains in contraction.

The market expected (from Econoday):

Seasonally Adjusted Quarter-over-Quarter Change at an annual rate Consensus Range Consensus







Real GDP - Q/Q change - SAAR 33.0 % to 33.7 % +33.1 % +33.1 % +33.1 %  
Real Consumer Spending - Q/Q change - SAAR     +40.7 % +40.6 %  
  • Headline GDP is calculated by annualizing one quarter's data against the previous quarter's data. A better method would be to look at growth compared to the same quarter one year ago. For 3Q2020, the year-over-year growth is now -2.6 % - up from 2Q2020's -9.0 % year-over-year. So one might say that the rate of GDP growth accelerated by 6.4 % from the previous quarter.

Real GDP Expressed As Year-over-Year Change

The same report also provides Gross Domestic Income which in theory should equal Gross Domestic Product. Some have argued the discrepancy is due to misclassification of capital gains as ordinary income - but whatever the reason, there are differences.

Real GDP (blue line) Vs. Real GDI (red line) Expressed As Year-over-Year Change

This third estimate released today is based on more complete source data. (See caveats below.)

Real GDP per Capita

The table below compares the previous quarter estimate of GDP (Table 1.1.2) with the current estimate this quarter which shows:

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