People shop at a Walmart store in Sugar Land, Houston, Texas, U.S., July 16, 2020. Photo:China News Service

The US economy shrank further by about 3 percent on a yearly basis in the third quarter, and the full-year GDP figure will also decline due to the country's failure in handling the epidemic and sliding consumption power amid an uncertain outlook, analysts and agencies said.

In terms of the percentage change from a year earlier, the US economy contracted 9 percent in the second quarter and 2.9 percent in the third quarter.

On a quarterly basis, US GDP grew at a 33.1-percent annual rate in the third quarter, a record high and also beating expectations. In the third quarter alone, the US economy grew 7.4 percent compared with the second, official data showed on Thursday.

"The improvement from the second quarter is more of a technical factor, as the US economy collapsed in the second quarter at an annualized and seasonally adjusted rate of 31.4 percent - the biggest drop on record," Song Guoyou, deputy director of the Center for American Studies at Fudan University, told the Global Times on Thursday.

On a yearly basis, the US economy is still contracting and may need more time to recover, Song said.

Moreover, the foundation for a future increase in the US economy is not solid as long as the epidemic has not been be curbed, Song said.

The epidemic continued to set records in the US on Wednesday. The US has counted a record 500,000 new cases in the past week, and hospitals in isolated areas of the Midwest are rapidly filling up.

Employment also grew at a slower-than-expected pace. The US created 661,000 new jobs in September and the unemployment rate fell again to 7.9 percent - the lowest level of the epidemic - but the gain in hiring was the smallest since the economy reopened.

Song added that consumption, which is the main driver of US GDP growth as it accounts for more than two-thirds of the economy, may also decelerate in the fourth quarter as another round of government stimulus is unlikely soon. 

"That may greatly curb willingness to spend," said Song.

Experts also warned of a possible Black Swan event ahead of the US election next week. The Dow Jones Industrial Average fell 943 points on Wednesday, or 3.4 percent, to 26,519.95, the largest one-day decline for the index since June 11. The S&P 500 was down 3.5 percent, and the NASDAQ Composite Index dropped 3.7 percent.

Ahead of the US election, market sentiment is very unstable, Yang Delong, the chief economist at Shenzhen-based First Seafront Fund Management Co told the Global Times on Thursday, and uncertainty has risen for investors.

Even after the election on November 3, Yang said, the severity of the epidemic in the US will still be an important factor affecting its economic recovery

By contrast, the Chinese stock market could be a safe haven for global investors due to China's effective control of the virus, Yang said, adding that foreign capital will continue to flow into the A-share market, especially high-quality companies.

The A-share market opened sharply lower on Thursday, affected by the big decline in the US, although the three major stock indexes recovered later in the day.

The Chinese economy will continue to lead the world recovery after the epidemic in the US and Europe has become the biggest uncertainty for the world economy, analysts said.


Newspaper headline: US economy contracts 2.9% y-o-y in Q3