The U.S. economy shrank in April-June with an alarming annual rate of 31.7% as it struggled under the weight of the viral pandemic, the government estimated Thursday. It was the sharpest four-year drop on record.
The Department of Commerce downgraded its previous estimate of U.S. gross domestic product last quarter, finding that the devastation was slightly less than the 32.9% annual shrinkage it had treasure in July. The previous worst quarterly decline since registration began in 1947 was an annual loss of 10% in 1958.
Last quarter closed companies and millions of workers lost jobs as the world’s largest economy went into lockdown mode, and only successfully managed to curb the spread of reported viral infections. The U.S. economy fell an annual 5% in the first three months of the year when the coronavirus began to make its presence felt in February and March.
A return to rent, as many businesses reopened, suggested that the economy began to recover in June with third-quarter growth estimated at around 20% annually. But economists say a full recovery remains far away, given that the virus has yet to be contained and government financial support has disappeared.
“As we approach the fall, we see four major risks for the economy: a failure of 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 American economist at Oxford Economics.
at 10.2%, and are about 1 million people apply for unemployment benefits every week even if the amount of help they receive is shrinking. Consumer confidence is tumbling. While the stock market and home sales are booming, the broader economy is showing signs of stagnation, and millions of Americans are facing potential evictions from their homes.
The challenges reflect the unusual nature of the decline. Many U.S. households have increased their savings and paid off debt – which may signal a hesitation to spend as they have in the past or revamped demand that could be released once the pandemic ends.
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