COVID-19: US economy collapse by 32.9% in second quarter

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The US economy collapsed in the midst of the coronavirus pandemic in the April-to-June period, contracting 32.9 percent in the second quarter, the government reported Thursday.

The decline, though slightly less bad than expected, was the worst on record for the world’s largest economy, dating back to 1947.

However, the Commerce Department figures are an annual rate so not comparable to the quarterly contractions reported in other advanced economies.

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Compared to the same quarter of 2019, economic activity fell 9.5 percent.

The plunge in GDP was driven largely by the drop in consumer spending, the largest component, which fell 34.6 percent annualized, according to the first estimate for the second quarter.

In this file photo taken on June 29, 2020, The “Fearless Girl” statue stands in front of the New York Stock Exchange (NYSE) at Wall Street in New York City. Angela Weiss / AFP

After a 5.0 percent drop in the first three months of the year, economists had been expecting the damage from COVID-19 to contract activity by 35 percent or more amid the nationwide halt to travel and much business, which caused tens of millions of jobs to be destroyed.

The data show trade also took a huge hit, with exports falling just over 64 percent, and imports down 53.4 percent.

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But personal income got a boost of $1.4 trillion in the quarter from the government emergency spending measures that provided payroll funds for businesses and direct unemployment payments to workers.

The annualized data assumes the damage wrought in a single quarter will play out over the entire year, but economists expect a rebound in coming months.

However, the hopeful signs in May and June have given way amid a resurgence of virus cases in July that has forced authorities in some states to reimpose restrictions.

US stocks futures were down a bit less than one percent following the data.


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