The U.S. economy shrank in the second quarter by the fastest rate since the government began keeping track of gross domestic product after World War II, as lockdowns aimed at curbing the coronavirus pandemic decimated economic activity and anti-police riots tore through many American cities.
Gross domestic product, or the value of all goods and services produced by the economy, contracted at a 32.9 percent seasonally adjusted annualized rate in the April through June three month period, according to the preliminary estimate from the Bureau of Economic Analysis published on Thursday. That marked the steepest drop on records stretching back to 1947 and compared with economists’ forecasts for a 35 percent decline in output.
The BEA reports the change in GDP on an annualized basis, which can exaggerate the impact of temporary and sudden shifts in the economy. Compared with both a year ago and with the first quarter of the year, GDP was down 9.5 percent.
The previous record decline on the standard, annualized basis was a 10 percent drop in the first quarter of 1958. The U.S. economy shrank at a 5 percent rate in the first three months of 2020.
Consumer spending crashed at an annualized rate of 34.6 percent in the quarter, led by a 43.5 percent annualized decline in spending on services. Consumer spending on goods fell at an annualized 11.3 percent. Private sector investment fell 49 percent, driven down by a 38.7 percent decline in residential investment, a 34.9 percent decline in commercial building investment, and a 37.7 percent decline in equipment investment. –READ MORE
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