The drop in Covid cases and pent-up demand heading into the holidays could push services spending much higher in the fourth quarter, “but that can only happen if more workers return to those sectors,” she said. Markowska, who expects GDP to grow 7.7 percent in Q4, said declines in new jobless claims suggest we’ll see a better payroll number in next Friday’s jobs report for October. Workers return to the labor market - As demand shifts from the manufacturing to the services sector, more workers will be essential to keep up, said Aneta Markowska, chief financial economist at Jefferies. While another Covid wave this winter is certainly possible, some economists expect it won’t weigh on consumer activity as much as previous surges have. Continued decline in Covid cases - The virus is still one of the biggest drivers of economic activity, and the decline in new cases - 60 percent since the summer peak - plus the availability of booster shots and vaccines for children ages 5 to 11 are expected to bolster growth.
What needs to happen for us to see a big year-end bounce? The White House amplified that message this week, pointing to signs that activity has already turned a corner.
The good news: Economists expect that a weak third quarter will translate to big gains at the end of the year, with some estimating GDP growth north of 8 percent in the fourth quarter. Get it on your desktop or download the POLITICO mobile app for iOS or Android. DON’T MISS CONGRESS MINUTES: Need to follow the action on Capitol Hill blow-by-blow? Check out Minutes, POLITICO’s new platform that delivers the latest exclusives, twists and much more in real time.
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