Real GDP grew at just 2% in the third quarter, after consecutive quarters of more than 6% growth. New data released from the BEA confirms that the Delta variant of COVID-19 significantly slowed the return to normal economic growth. The Figure below compares real GDP with a trend line based on growth since 2010.
As a recap, shutdowns in early 2020 led to a 5% drop in the first quarter and then a 31% drop in the second quarter. Then, as many businesses adapted, the recovery began with a whopping 33.8% growth of real GDP in the third quarter. The first two quarters of 2021 yielded 6.3 and 6.7 percent growth as vaccine availability expanded. But the Delta variant clearly slowed the progress back toward trend, leading to just 2% real GDP growth in the most recent quarter.
Like everyone else, economists are hopeful that the recent decline in COVID-19 cases will help return us to pre-pandemic economic conditions, but 2% growth will not accomplish that.