Badly Battered by Coronavirus Pandemic, US Economy Contracts 32.9% In 2nd Quarter, Steepest Fall Since Great Depression

Badly battered by the coronavirus pandemic, the U.S. economy contracted at a record 32.9% annual rate in the second quarter of this year, The Wall Street Journal reported.

The latest economic contraction is the steepest since the Great Depression. Previously US GDP had never contracted by more than 10% on an annualized basis in any quarter since the government began maintaining quarterly growth data from 1947. The decline this quarter that is more than three times greater than in the first quarter of 1958, when GDP plunged by 10% annual rate.

Consumer spending contracted by a whopping 34.6% annualized while spending on services sector including travel, tourism, medical care plunged at a 43.5% annual pace. Households expenses dropped by 11.3%, Business investments also dropped dramatically as firms held back on spending.

Even as the US economy showed some signs of recovery in May, the recent surge in coronavirus cases in the economic powerhouse state like Texas, Florida and California, has also dealt a huge blow to the nascent economic recovery.

Millions of Americans are still out of work, thousands of businesses have shut and many of those that remain open have scaled down operations because of weak demand or ongoing lockdown. According to Labor Department release on Thursday, applications for unemployment benefits increased by a seasonally adjusted 12,000 to 1.43 million for the week ended July 25.

The collapse in economic growth and tepid recovery potential is sure to put pressure on the White House and Congress to deliver another stimulus package.