United States Capitol, Washington DC

The U.S. economy grew at a record 33.1% annual rate in the July-September quarter but has yet to fully rebound from its plunge in the first half of the year — and the recovery is slowing as coronavirus cases surge and government aid dries up.

The Commerce Department’s estimate Thursday of third-quarter growth showed that the nation has regained only about two-thirds of the output that was lost early this year when the eruption of the virus closed businesses, threw tens of millions out of work and caused the deepest recession since the Great Depression.

The economy is now weakening again and facing renewed threats. Confirmed viral cases are surging. Hiring has sagged. Federal stimulus has run out. With no further federal aid in sight this year, Goldman Sachs has slashed its growth forecast for the current fourth quarter to a 3% annual rate from 6%.

Gregory Daco, chief U.S. economist at Oxford Economics, noted that the record-high third quarter growth in the nation’s gross domestic product “tells us little, if anything, about momentum heading into” the current quarter.

“The strong GDP performance gives a false impression of the economy’s true health,” Daco wrote in a research note. “Much of the Q3 gain came from carry-over effects from fast progress in May-July… We anticipate a much slower second phase of the recovery, with output not reclaiming its pre-COVID level until late 2021.”

The latest GDP reading is the last major economic report before Election Day, after a campaign that President Donald Trump has sought to build around his economic record before the pandemic hit. Trump has drawn generally solid public support for his handling of the economy.

On Thursday, the government also reported that the number of Americans seeking unemployment benefits fell slightly last week to 751,000. That was the fewest weekly applications since March, but the level remains historically high and indicates that the viral pandemic is still forcing many employers to cut jobs.

Though the unemployment rate, at 7.9%, is down significantly from 14.7% at the start of the pandemic recession, it is still historically high. And hiring has slowed for three straight months. The economy is still roughly 10.7 million jobs short of recovering all the 22 million jobs that were lost to the pandemic.

The government’s estimate of the third-quarter jump in the gross domestic product — the total output of goods and services in the United States — was the biggest such increase on records dating to 1947. In the January-March quarter this year, GDP had contracted at a 5% annual rate before a record-setting 31.4% annual tumble in the spring.

Mark Zandi, chief economist at Moody’s Analytics, said he thinks GDP will regain pre-pandemic levels by spring of next year, with GDP expanding 4.2% for 2021. But he warned that the job market might not fully recover until perhaps 2023.

“Many of the jobs in retailing, leisure and airlines have been permanently lost,” he said, “and those folks will have to find different work, and that will take time.”

The third quarter economic growth was powered by a record 40.7% annual increase in consumer spending. Americans began shopping again after the spring shutdown, which had sent consumer spending sinking by a record 31.4% annual rate. Consumer spending accounts for roughly two-thirds of economic activity.

Business investment rose a strong annual rate 20.3%, reflecting a 70.1% surge in investment in equipment. Residential investment surged at a a 59.3% rate, reflecting a solid rebound being enjoyed by home builders as demand for homes rises.

The government reports the quarterly GDP changes as annual rates. That means the change for any given quarter is calculated as if it had occurred for an entire year. Measured another way, GDP grew 7.4% from the April-June quarter to the July-September quarter, after tumbling 9% from the first quarter to the second and dropping 1.3% from last year’s fourth quarter to the first quarter this year.

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. That fear has burst into the open this week across global financial markets. On Wednesday, U.S. stock averages tumbled roughly 3.5%, with the Dow Jones Industrial Average shedding 943 points.

A new wave of lockdowns and business closings has swept across France, Germany and elsewhere as surging viral infections on both sides of the Atlantic wipe out months of progress against the pandemic. In France, President Emmanuel Macron has declared a new nationwide lockdown starting Friday, saying the country has been “overpowered by a second wave.” In Germany, Chancellor Angela Merkel announced a four-week shutdown of bars, restaurants and theatres.

In the United States, where nearly every state is suffering from a rise in cases, Gov. Tony Evers of Wisconsin, one of the hardest-hit states, has pleaded with people to stay home. Gov. J.B. Pritzker of Illinois has banned indoor dining and drinking in Chicago and limited the size of gatherings in response to a surge in cases.