Annualized, The U.S. Economy Declined 37.1% In The Second Quarter Of 2020
The Associated Press reported Thursday that the U.S. economy “shrank at an alarming annual rate of 31.7% during the April-June quarter as it struggled under the weight of the viral pandemic,” according to the government’s estimate, marking “the sharpest quarterly drop on record.”
- “The Commerce Department downgraded its earlier estimate of the U.S. gross domestic product last quarter, finding that the devastation was slightly less than the 32.9% annualized contraction it had estimated at the end of July,” the AP reported.
- Previously, the worst quarterly drop was a 10 percent annualized loss in 1958. Record-keeping began in 1947.
- Last quarter saw businesses close and millions of Americans lose their jobs as the pandemic forced lockdowns that “succeeded only fitfully in limiting the spread of reported viral infections.”
- “A bounce-back in hiring as many businesses reopened suggested that the economy began to recover in June with third quarter growth estimated to be around 20% annualized,” the report continued; however, a full recovery remains far off, economists say, as the virus has not yet been contained and government support has fallen away.
“As we approach the fall, we see four important risks for the economy: a failure to provide further fiscal stimulus, a second wave of COVID-19 infection during the flu season, major election uncertainty and rising trade tensions with China,” said Lydia Boussour, senior U.S. economist at Oxford Economics.