WASHINGTON (Reuters] – The U.S. economy experienced a slowdown in third-quarter growth due to an outbreak of COVID-19 infected. But, activities have since increased and are on track for its strongest performance in this year’s history since 1984.

The Commerce Department reported that the annualized gross domestic product grew by 2.3% in the third quarter of the July-September quarter. Although this was higher than the 2.1% pace predicted last month, it still represents the lowest rate since 2020’s second quarter when the economy was hit hard by mandatory measures.

Reuters polled economists to forecast that third-quarter GDP growth would be unrevised at 2.1%. In the second quarter, GDP grew 6.7%.

The slower pace of growth in the last quarter was also due to strained supply chains and a shortage of vehicles. There has been a decrease in money for pandemic relief from the government, which is now available only to households, businesses and states.

Also, growth was hampered during Hurricane Ida which decimated U.S. offshore energy production in August.

But, the economy has picked up speed. The economy has seen solid growth in consumer spending and a strong manufacturing sector. Trade deficit fell sharply in October due to record exports and steady rebuilding of inventories by businesses. At 4.2%, the unemployment rate has fallen to a 21-month low.

A Reuters poll of economists found that growth could be as high at 5.6% this year, the highest rate since 1984. In 2020, the economy shrank by 3.4%.

The emerging winter wave coronavirus infection, triggered by Omicron variants and the Delta, may significantly limit growth in the first quarter. The announcement on Sunday by Senator Joe Manchin (moderate Democrat) that he will not vote for President Joe Biden’s $1.75 Trillion domestic investment bill, Build Back Better(BBB), has also impacted growth prospects.

Goldman Sachs (NYSE 🙂 lowered its first-quarter GDP growth projection to a rate of 2% from a pace of 3% on Sunday.

Others have also followed their lead, and the failure of the BBB legislation to be passed has been seen as hurting consumer spending. It is also slowing down the recovery process in the labor market.

Kathy Bostjancic (chief U.S. economic economist, Oxford Economics in New York), stated that the surge in Covid cases was reducing momentum going into 2022. Although there is a chance BBB could be restructured in order to address Manchin’s concerns at this point, the odds of passage are very slim.”