US economy plunges by annualized 31.7% in Q2
Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort in the US state of Kentucky.
The US economy shrank at an annual rate of 31.7 percent during the April-June quarter as it struggled under the weight of the pandemic, the government said yesterday. It was the sharpest quarterly drop on record.
The Commerce Department downgraded its earlier estimate of US gross domestic product last quarter, finding the impact was slightly less than the 32.9 percent annualized contraction it had estimated in July. The previous worst quarterly drop since record-keeping began in 1947 was a 10 percent annualized loss in 1958.
Last quarter, businesses shuttered and millions of workers lost jobs as the world’s largest economy went into lockdown. The economy fell an annualized 5 percent in the first quarter as the coronavirus began to impact in February and March.
A bounce-back in hiring as many businesses reopened suggested the economy began to recover in June with third-quarter growth estimated about 20 percent annualized. But economists say a full recovery remains far off given the virus has yet to be contained and the government’s financial support has faded.
“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 US economist at Oxford Economics.
Unemployment is still high at 10.2 percent, and roughly 1 million people are applying for jobless aid each week even as the amount of aid they receive has shrunk. Consumer confidence has tumbled. Although the stock market and home sales are surging, the broader economy shows signs of stalling, and millions face potential eviction from their homes.
