The outbreak of the corona virus has hit the US economy harder and faster than any event in the history of modern economic data.
This dark point was officially announced on Thursday when the United States Department of Economic Analysis announced that real GDP in the second quarter – April to June – fell 32.9% year-on-year. This is the largest quarterly decline in data since 1947 and represents more than $ 1 trillion in economic output wiped out by the coronavirus pandemic. The number is three times worse than the previous record of 1958, when the economy declined 10% quarterly.
No matter how you look at it, it's a sum that is likely to have a huge impact on election day in just over three months in American political circles.
That is 32.9% The decline follows a 5% decrease in the first quarter, which included only the first few weeks of the pandemic.
The good news? Some economists believe that the worst is over and that the economy has already made up some of the losses reported in today's report. Goldman Sachs expects GDP to grow 25% in the third quarter as the economy benefits from countries that have been able to reopen.
Mark Zandi, chief economist at Moody's Analytics, believes that the recession ended in May and that we have recovered since then. Labor data prove this. The unemployment rate has dropped from a high of 14.7% in April to 11.1% in June. And the state unemployment rate has dropped from a record high of 24.9 million in the week of May 9 to 16.2 million on July 11.
However, GDP growth in the third quarter could be threatened by the rising COVID-19 cases in the South, West and Midwest. Florida, a hot bed for the virus, led the nation last week in unemployment claims, another sign that the virus could pull the economy back.
“The intensification of the virus causes considerable economic damage. Sales are reversing … businesspeople are more careful, ”said Zandi.
And Zandi believes that if Congress allows the additional $ 600 unemployment benefit to go on without renewal, it could hamper consumer spending and drive the economy into a dreaded double-dip recession.
More needs to be read Financial coverage from capital::
- VC icon Alan Patricof and SoulCycle veterinarian Abby Levy launch funds to invest in aging
- When does the pandemic end? Not before 2022, ex-USA. General surgeon warns
- Women are more concerned about layoffs than their male employees
- PPP part 3? Everything you need to know about the planned expansion of the small business loan program
- Brian Moynihan, CEO of Bank of America, on how companies can measure stakeholder capitalism