United States Economy Shriveled At Record-Breaking 33 % Rate Last Quarter.
In the last quarter’s drop followed a 5% fall in the quarter of January-March. The economy officially started a recession triggered by the virus, ending an 11-year economic expansion, the longest on record in the United States.
The government said on Thursday, The US economy shriveled at a dizzying 33 percent annual rate in the quarter of April-June by far the worst quarterly fall ever when the viral outbreak shut down businesses, projecting tens of millions out of work and sending unemployment rising 14.7 percent.
The Commerce Department’s calculation of the second-quarter decline in the gross domestic product, the total output of services and goods, marked the sharpest such drop on documents dating to 1947. The previous most critical quarterly contraction, a 10 percent fall, occurred in 1958 during the Eisenhower administration.
Last quarter’s drop reflected a 5 percent fall in the quarter of January-March. The economy officially began a recession triggered by the coronavirus, ending an 11-year economic expansion, the longest on record in the US.
The contraction last quarter was run by a broad pullback in consumer spending, which accounts for about 70% of economic movement. Spending by consumers fell at a 34% annual rate as travel all but froze, and closedown orders forced many bars, restaurants, entertainment venues, and other retail establishments to close.
Business investment and residential housing also experienced sharp declines in the last quarter. Government is spending, diminished by a loss of tax revenue that forced layoffs, also fell.
The job market, the most critical pillar of the economy, has been severely damaged. Tens of millions of jobs faded in the recession. More than 1 million laid-off people applied for unemployment perks for 18 through weeks. So far, about one-third of the vanished jobs have improved, but the resurgent virus will likely slow further gains in the job market.
President Donald Trump has constrained states to resume businesses despite concerns that the virus persists a threat to customers and workers at many service industry jobs that need constant face-to-face contact.
So dizzying was the contraction last quarter most analysts expect the economy to produce a sharp bounce-back in the current quarter July-September, perhaps of as much as 17 percent or higher on an annual basis.
With the rate of confirmed active coronavirus cases having surged in a majority of states, more businesses ordered to pull back on re-openings, and the Republican Senate recommending to scale back government aid to the jobless, the economy could worsen in the months forward.
The Government administration is wagering against that outcome in asserting that the economy will experience a V-shaped revival in which last quarter’s plunge would follow by an impressive rebound in the current quarter a hoped-for dose of good news that would report in late October, not long before Election Day.