Washington

THE US economy grew at an unrivalled pace in the third quarter as the government poured out more than US$3 trillion in pandemic relief measures, which fuelled consumer spending.

But observers say the deep scars from the Covid-19 recession could take a year or more to heal.

Gross domestic product (GDP) rebounded at a 33.1 per cent annualised rate last quarter, the US Commerce Department said in its advance estimate on Thursday.

The fastest pace since the government started keeping records in 1947, it followed a historic shrinkage rate of 31.4 per cent in the second quarter.

The GDP report, one of the last major economic scorecards before next week's presidential election, will do little to mitigate the human tragedy inflicted by the coronavirus pandemic, with tens of millions Americans still unemployed and more than 222,000 dead.

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With five days remaining to Election Day, President Donald Trump, trailing in most national opinion polls, will probably seize on the stunning rebound in GDP as a sign of recovery.

But US output remains below its level in the fourth quarter of 2019, a fact which his Democratic challenger Joe Biden is almost certain to highlight, along with signs that the growth spurt is fast petering out.

Economists polled by Reuters had forecast that the economy would expand at a 31 per cent rate in the July-September quarter.

The economy had slipped into recession in February.

The government's rescue package provided a lifeline for many businesses and the unemployed, juicing up consumer spending, which on its own powered the surge in GDP.

But government funding has been depleted, with no deal in sight for another round of relief.

New Covid-19 cases are spiralling across the country, forcing restrictions on businesses like restaurants and bars.

Just over half of the 22.2 million jobs lost during the pandemic have been recouped, and layoffs persist.

Applications for US state unemployment benefits fell more than forecast last week, suggesting that the labour market remains on the path of gradual improvement - while still far from its pre-pandemic health.

Initial jobless claims in regular state programmes totalled 751,000 in the week ended Oct 24, down 40,000 from the prior week, Labor Department data showed on Thursday.

On an unadjusted basis, the figure decreased by a little more than 28,000.

Continuing claims - the total pool of Americans on ongoing state unemployment benefits - decreased 709,000 to 7.76 million in the week ended Oct 17.

Continuing claims have fallen for five straight weeks.

Still, the number of Americans on emergency assistance programmes rose as many unemployed exhausted their regular state benefits. REUTERS, BLOOMBERG