New York: We knew the United States economy fell off a cliff in the second quarter. On Thursday, we learned just how steep that dive was.
The US economy plunged a staggering 32.9 percent from April through June on an annualised basis, the Bureau of Economic Analysis reported – by far the worst contraction on record.
In the first quarter of this year, when the US officially entered recession in February, the economy shrank 5 percent from the same period a year ago.
Before coronavirus lockdowns swept the nation in March, the worst reading on US gross domestic product (GDP) – which measures the value of all the goods and services produced in the economy – was recorded in 1950, when the US economy shrank 10 percent in the first quarter.
A sharp contraction in consumer spending was the main driver pushing the economy into its second-quarter chasm. Before the pandemic, consumer spending drove two-thirds of US economic activity.
A plunge in exports, inventories, business and residential investment, as well as state and local government spending, also contributed to the historic weakness.
Though the GDP number came in at the higher end of economists’ estimates, it was widely expected to shatter previous records.
Economic activity in the US and around the world ground to a halt in March as measures designed to contain the spread of COVID-19 halted trade, forced businesses to shutter and consumers to shelter in place.
