U.S. Economy Drops by 32.9% in Second
Quarter, the Worst Plunge on Record: 'Horrific'
The rate for the first quarter of 2020 was 5
percent, before coronavirus shuttered businesses
across the country
By Rachel DeSantis
July 31, 2020 "Information
Clearing House" - The U.S. economy
shrunk by a record-breaking amount in the second
quarter of 2020, with the gross domestic product
dropping at an annual rate of 32.9 percent, the
Bureau of Economic Analysis said Thursday.
The rate was 5 percent in the first quarter
of 2020, before the coronavirus descended upon
the country, shuttering businesses and killing
more than 150,000 Americans.
Thursday’s numbers were three times worse
than the previous record of 10 percent in 1958,
according to
NPR, and nearly four times worse than during
the peak of the financial crisis in 2008,
CNN Business reported.
“[It’s] horrific. We’ve never seen anything
like it,” Nariman Behravesh, chief economist at
IHS Markit, told NPR. “Until we get the virus
under control, we’re going to need more help.
Our view is that we’re not going to get to the
pre-pandemic levels of economic activity until
some time in 2022.”
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The Bureau of Economic Analysis said the stats
reflected a decrease in things like consumer
spending, particularly services like healthcare, and
goods including clothing and footwear, exports,
inventory investment and housing investment.
The
dire economic situation has now pushed the United
States into its first recession in 11 years,
according to CNN Business.
Despite the numbers being the biggest quarterly
plunge in activity on record since the Great
Depression, the rate was better than the 34.7
percent that economists surveyed by Dow Jones had
expected,
CNBC reported.
The
U.S. Department of Labor said Thursday that the
number of initial unemployment claims was 1.43
million for the week ending July 25, up 12,000 from
the previous week.
The same week in 2019 saw just 216,000 people
file for first-time unemployment.
Though the unemployment rate has improved (it was
reportedly around 14.7 percent in April, and is now
11.6 percent), the U.S. is still down 15 million
jobs since February, CNN Business reported, and the
federal government's supplemental unemployment
benefits of $600 per week are expiring this week.
As NPR noted, GDP swings are usually reported at
an annual rate, “as if they were to continue for a
full year — which can be misleading in a volatile
period like this” where progress and setbacks are
ever-evolving.
