Second quarter economy for the United States is not looking good, reported to a whopping 32.9 percent annual loss in gross domestic product, a significant steep drop for the world’s largest economy.
Epic drop
As the pandemic continues to disrupt economic activities from all over the world, the US Department of Commerce has reported on Thursday America’s worst performance yet—32.9 percent contraction—since records began by 1947. It is also thrice the all-time high shrink way back in 1958. A more recent recession pulled the economy down by 8.4 percent at an annual rate back in 2008’s fourth quarter.
Per the Bureau of Economic Analysis report, the dive in the quarter two of the economy is a reflection of “the response to COVID-19, as ‘stay-at-home’ orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses.”
As CNN Business noted, GDP data are reported in an annualized rate, so if not expressed in a 12-month basis, quarterly drop is 9.5 percent.
There’s what Donald Trump wants us to be talking about and covering in the news, and then there’s this. https://t.co/80HVFp5aHQ
— Dan Rather (@DanRather) July 30, 2020
Interrupting US economic expansion
Shutdown and restrictions began in the US around March when the outbreak was just beginning, which caused the economic activities to also be affected. This include hurting businesses and various industries, followed by a climb in unemployment among Americans. Many establishments were closed, transportation is limited, and spending declined. First quarter, which include March, saw a 4.8 percent annualized drop in the GDP. This then paved the path for the country to enter another recession after over a decade of economic expansion.
Decelerating recovery
Though this decline in GDP was expected by economists, with an estimated 35 percent annualized drop, they are forecasting recovery afterwards but not to the point before the pandemic. Around May, economists are seeing rebound for the economy as efforts of reopening roll out in several states.
However, with the continued increase in confirmed cases, economic pickup may be slowing down due to another round of restrictions to further curb the spread of the virus. Job rate, which is not looking good, will factor in as well, with an additional 1.43 million filing for the unemployment benefit last week. Meanwhile, the stimulus package for the jobless Americans are yet to be extended by the Congress.