US ECONOMY SUFFERS 32.9% PLUNGE IN SECOND QUARTER
This is the deepest decline in output since the government started keeping records in 1947; the previous all-time decline was of 10%
The United States economy suffered its sharpest downturn since at least the 1940s in the June quarter, highlighting how the pandemic has ravaged businesses across the country. Its gross domestic product shrank 9.5 per cent in the second quarter from the first, a drop equal to an annualised pace of 32.9 per cent. The Dow Jones Industrial Average was down 527.37 points, or 1.99% at 26,012.20, as of 9.30 pm IST.
Economic output fell at its fastest pace on record last spring as the corona virus pandemic forced businesses across the United States to close their doors and kept millions of Americans shut in their homes for weeks.
Gross domestic product (GDP) — the broadest measure of goods and services produced — fell 9.5 per cent in the second quarter of the year, the Commerce Department said Thursday. On an annual is ed basis, the standard way of reporting quarterly economic data, GDP fell at a rate of 32.9 per cent.
The collapse was unprecedented in its speed and breathtaking in its severity. The only possible comparisons in modern American history came during the Great Depression and the demobilisation after World War II, both of which occurred before the advent of modern economic statistics.
Unlike past recessions, this one was a result of a conscious decision to suspend economic activity to slow the spread of the virus. Congress pumped trillions of dollars into the economy to sustain households and businesses, limit long-term damage and allow for a rapid rebound.
The plan worked at first. In recent weeks, however, cases have surged in much of the country. The data from public and private sources indicate a pull-back in economic activity, reflecting consumer unease and renewed shutdowns.
“In another world, a sharp drop in activity would have been just a good, necessary blip while we addressed the virus ,” said Heather Boushey, president of the Washington Center for Equitable Growth, a progressive think tank. “From where we sit in July, we know that this wasn’t just a short-term blip.”
The number of Americans filing new claims for state unemployment benefits totalled 1.4 3 million last week, the Labour Department reported Thursday.
It was the 19th straight week that the tally exceeded one million, an unheard-of figure before the coronavirus pandemic. And it was the second weekly increase in a row after nearly four months of declines, a sign of how the rebound in cases has undercut the economy ’s nascent recovery. Claims fort hep revious week totalled 1.42 million.
New claims for Pandemic Unemployment Assistance, the government’s programme aimed at covering freelancers, the selfemployed and other workers not covered by traditional unemployment benefits, totalled 830,000, down from 975,000 the week before. Those numbers, unlike t he figures for state claims, are not seasonally adjusted. “We’re still in a desperate situation,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago. Noting that weekly claims were in the 200,000 range before the pandemic brought widespread shutdowns in March, she added, “This is unique in terms of the speed and magnitude of the job losses.”
What’s more, fears are growing that after rebounding strongly in May and June, the economy has run out of steam, with many states reversing the reopening of businesses.
“Everyone wants to keep putting on rose - colored glasses, but it’s blinding us to the reality of the situation and what we have to deal with,” Swonk said.
At the same time, the $600 supplemental weekly unemployment payment from the federal government is ending, a potentially crippling financial blow to millions. Republicans have proposed replacing the supplement with a $200 weekly payment, while Democrats want to extend it in full. “We’re nowhere close to a deal,” Mark Meadows, t he White House Chief of Staff, said Wednesday.