Predicting the highest quarterly GDP growth in history.

Record economic growth on the way as election approaches

The economy is on course for a record jump in gross domestic product in the third quarter, which will be announced shortly before November’s election.

"I certainly think it will be double digits," said Doug Holtz-Eakin, the president of the center-right economic think tank American Action Forum who was also the chief economic policy adviser to Sen. John McCain's 2008 presidential campaign.

The existing record for GDP growth is the 16.7% annual rate set in the first quarter of 1950. Several projections expect GDP growth in the third quarter of 2020, which will be announced on Oct. 29, just days before the Nov. 3 election, to eclipse that figure.

S&P Global Ratings projects a 22.2% annualized jump in third-quarter GDP, according to Beth Ann Bovino, the chief U.S. economist at the company.

However, Bovino’s projection drops to 18% if Congress fails to extend the $600 enhanced unemployment benefit that expired last month. Congressional leaders are currently negotiating the fate of the payment and hope to come to an agreement on it within the next two weeks.

Wells Fargo Securities forecasts 18% growth in third-quarter GDP, a projection it revised downward by 6% due to recent spikes in coronavirus around the country and states hitting pause on reopening their economies.

Holtz-Eakin expects an increase in the 20% range, which is in line with projections by White House economic adviser Larry Kudlow.

“The Atlanta Fed GDP now is now scoring Q3 at 20%. You have heard that from me any number of times in the last few weeks. I'm going to stay with that,” he told Fox Business Network’s Varney & Co. on Tuesday.

The Atlanta Fed originally predicted an 11.9% increase for the third quarter, but it bumped up its forecast after the economic activity in the manufacturing sector grew in July, and personal consumption is expected to increase in the third quarter.

The record numbers wouldn't reflect underlying economic health. Rather, they would represent a partial restarting of the economy after the worst of the pandemic interruptions to business. GDP shrunk at a record-breaking 32.9% annual rate in the second quarter, the Bureau of Economic Analysis reported last week.

Despite the expected third-quarter growth, economic activity will still be below what it was before the pandemic hit the U.S.

Still, a big economic growth number for the third quarter could be a feather in the cap of Trump’s reelection campaign, as economic trends have proved highly influential in presidential elections. But capitalizing on GDP growth will be easier said than done.

At issue is that the late-October release is just four days ahead of November’s election.

That leaves little time to tout the figure to undecided voters and sway their opinion, according to Holtz-Eakin.

“I think it’s probably [too late] to substantially change things,” he told the Washington Examiner.

Holtz-Eakin said that economic conditions three to six months ahead of the election is what matters to most voters and that many of them will have chosen their candidate by the time Oct. 29 rolls around.

He also expects there to be a large number of mail-in voting, and those ballots will likely be cast long before the GDP number is announced.

“People are going to vote earlier … a lot of ballots will already have been cast … so you can’t move those ballots,” he said.

Yet Holtz-Eakin said that other indicators, such as jobs growth, manufacturing output, personal spending, can be used to inform the public that the economy is on the mend.

“These are indicators that the department is going to use to construct its GDP estimate,” he said, adding, “so if the [Trump] campaign is doing its job, they’re going to make sure everyone is aware that the GDP is going up. … You want a drumbeat of good news. You want to create that drum beat.”