Coronavirus pandemic pushes USA economy to worst-ever contraction

Coronavirus pandemic pushes USA economy to worst-ever contraction

The US economy collapsed in the midst of the coronavirus pandemic, suffering the largest decline on record, while hopes for a recovery took another hit as job losses increased, according to government data released Thursday. That's by far the worst plunge ever recorded, based on Bureau of Economic Analysis (BEA) data spanning back to 1947. "The challenge is that we're now entering a period where you're kind of stuck at the half-way point with the economy starting to level off again".

Second-quarter GDP is forecast to contract 34.1% annualized while Atlanta Fed GDPNow estimate for Q2 is -34.3%.

"The staggering news of the historic decline of the gross domestic product in the second quarter should shock us all", US Chamber of Commerce Executive Vice President Neil Bradley said in a statement.

The figure reflects how the coronavirus pandemic has clobbered the USA economy with unprecedented speed and furor as it shut down large swaths of businesses over the past few months.

The contraction occurred as the coronavirus pandemic was running rampant across the country.

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Separately, the Labor Department also said Thursday that another 1.4 million workers filed jobless claims last week, another indicator of the ongoing anguish that the pandemic has caused to the economy as a whole.

The plunge in GDP was driven largely by the drop in its largest component consumer spending, which fell 34.6% annualised, according to the data, which was the first estimate for the second quarter.

"But odds are the second-half recovery will be slower than initially expected, making up for less than half of the second-quarter drop".

Adding to the economic gloom was a disappointing jobless claims report, also released Thursday, which showed that initial weekly unemployment filings rose for the second straight week after steadily falling from its March peak of nearly 7 million. The unemployment rate was 11.1% in June and is likely to remain in double digits through the fall.

"This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending".

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