U.S. Economy Shrank At Record Yearly Rate Of 32.9% In Q2 Amid Pandemic Lockdowns
The U.S. economy contracted “at a seasonally adjusted annualized rate of 32.9 percent during the second quarter of 2020 as the first wave of the coronavirus pandemic spurred an economic collapse of record-breaking speed and size,” according to The Hill.
The Commerce Department reported that from April to June, U.S. gross domestic product (GDP) “shrunk at a pace that would have wiped out roughly a third of the value of the economy if extended over 12 months,” per the department’s advance estimate of second-quarter growth.
Thursday’s report shows the second quarter to represent “the largest one-quarter plunge in economic growth since the federal government began reporting quarterly GDP data.”
The Hill reported that “on a non-annualized basis, GDP shrunk roughly 9.5 percent between the first and second quarters of 2020.”
“This was the steepest decline since the start of the global financial crisis in 2008, when output shrank by 8.4%,” wrote Agathe Demarais, global forecasting director at The Economist Intelligence Unit in a Wednesday preview of the report. “The scale of the fall in the first quarter will be dwarfed by that in the second.”
The steep decline was not a surprise to economists “after the onset of the coronavirus pandemic forced millions of Americans into quarantine and out of work.”
“More than 20 million Americans lost their jobs in March and April as thousands of businesses were forced to close and lay off their workers,” The Hill reported.
The report comes as “the Trump administration, Senate Republicans and Democratic congressional leaders are struggling to strike a deal on another economic rescue package to guide the U.S. through the pandemic-driven recession.”
Economists have warned that the steep decline in fiscal support from Congress and the impact of a second wave of coronavirus infections could cause deep long-term damage to the U.S. economy that could take years to reverse.