The U.S. economy fell at an annual rate of 32.9% in the second quarter of 2020 due to the effects of the coronavirus pandemic, the largest quarterly decline since records were kept, the government reported Thursday.
The Department of Commerce published on Thursday its first report on the evolution of the gross domestic product (GDP) between April and June in the country, after the contraction of 5% annually in the first three months of the year.
The figure is slightly lower than that estimated by analysts, who had predicted a 35% fall.
“The decline in GDP in the second quarter reflects the response to COVID-19, as containment orders issued in March and April were partially lifted in some areas of the country in May and June, and government payments for the pandemic were distributed to households and businesses,” the official statement said.
“This led to rapid changes in activity as businesses and schools continued their remote work and consumers cancelled, restricted or modified their expenses,” it added.
Consumer spending, which accounts for two-thirds of economic activity in the United States, contracted by 34.6 percent.
RISK OF CASES
The quarterly collapse coincides with the strict measures of mobility restriction and business closure to control the spread of the virus.
As of June, several states in the country implemented a gradual reopening of activity so that economists believe that positive growth would resume in the third quarter.
However, in recent weeks there has been an upsurge in infections in southern and western states such as California, Texas and Florida, which has forced a reversal of some of these measures.
On Wednesday, the president of the Federal Reserve (Fed), Jerome Powell, said “it seems that the data point to a slowdown in the pace of recovery” but said it is still too early to say how big and sustained it will be.
All economists warn of the difficulties in making forecasts given the extraordinary uncertainty of the economy during the pandemic.
“The key point (for the third quarter) is that it will be much less positive than we were expecting a few months ago,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The United States on Wednesday surpassed 150,000 deaths from coronaviruses, 22.6 percent of all reported deaths worldwide, according to the independent Johns Hopkins University count.
ANOTHER RESCUE PACKAGE COMING
In March, the United States approved a $2.2 trillion economic stimulus package, the largest in the country’s modern history, aimed at countering the effects that the coronavirus pandemic has had on the economy, but the severity of the situation has proven insufficient.
“Fiscal support has helped and more will probably be needed,” Powell acknowledged when asked about ongoing negotiations in Congress for a second fiscal stimulus package.
The U.S. unemployment rate in June closed at 11.1%, well above the 3.5% with which the year began, before the arrival of the pandemic.
The first stimulus package was three times the amount implemented in 2008 after the outbreak of the financial crisis, which amounted to USD 700 billion.
The Republicans, with a majority in the Senate, on Monday presented a stimulus proposal valued at $1 trillion, far below the Democratic plan, which controls the House of Representatives, estimated at $3 trillion and which has already been rejected by the conservatives.
The disparity of positions points to prolonged talks, despite the fact that this weekend concludes the additional reinforcement of 600 dollars a week for the unemployed and protection against evictions, which has been the lifeline of many families since the beginning of the crisis in the U.S., at the end of March.