Real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent. Department of Labor released the data which shows that another 1.4M Americans filed unemployment claims last week. It is an increase of 12,000 from the previous week's revised level.
The decline in second quarter GDP reflected the response to COVID-19, as "stay-at-home" orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending.
The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.
Current‑dollar GDP decreased 34.3 percent, or $2.15 trillion, in the second quarter to a level of $19.41 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion. The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending.
The latest tally means that in less than five months, a stunning 54.1 million have sought unemployment aid for the first time. And it was another dismal marker on a day when the Commerce Department reported the U.S. experienced its worst performance ever in the second quarter, with the value of all goods and services produced contracting a seasonally adjusted annual rate of 32.9% in the April-June period, USA Today reported.
Congress passed the $2.2 trillion CARES Act in late March to address business closures and historic unemployment numbers caused by shutdowns in the early days of the pandemic. CARES Act provisions that provided a $600 weekly boost to unemployment insurance for tens of millions of Americans who lost their jobs are due to expire this weekend. Congress appears unlikely to negotiate an extension of those benefits by their self-imposed deadline at the end of July. Republicans have suggested decreasing the amount of unemployment aid from $600 a week to $200 a week, with state programs eventually replacing federal assistance. But Democrats say that is unacceptable when so many in the country are still out of work, Voice of America wrote.
During the last financial crisis GDP shrank 8.4% in the worst quarter of 2008, according to Credit Suisse. The previous record came in 1958 when economic growth fell 10% during the Eisenhower recession. The fall came as large parts of the US economy shutdown in March in an attempt to halt the spread of the coronavirus across the US. The closures led to a historic number of layoffs and sent unemployment soaring to levels unseen since the 1930s Great Depression.The record-setting quarterly fall in economic growth compared to the same time last year came as another 1.43 million Americans filed for unemployment benefits last week, a second week of rises after a four-month decline, according to The Guardian.