US GDP Fell by 32.9% in Second Quarter
Newly released analysis has shown how far the US economy cratered between April and June, beating all historic precedent.
Figures released by the US Bureau of Economic Analysis on Thursday have shown that real gross domestic product declined at a rate of 32.9% in the second quarter of 2020, the worst economic contraction in US history.
Analysis of Q1 revealed a 5% fall in GDP from January through to March as the COVID-19 pandemic was first reported in America. Prior to the new figures, GDP in the US has never fallen by more than 10% on an annualised basis since records began shortly after the Second World War.
Stocks were shaken by the report, with the Dow Jones, S&P 500 and Nasdaq falling by 1.5%, 1% and 0.56% respectively. International markets fared more poorly; the FTSE 100, DAX and CAC fell by 2.6%, 3.2% and 1.9%.
However, the reported economic contraction was not quite as precipitous as analysts predicted. Economists surveyed by Dow Jones reportedly expected to see GDP fall by 34.7%, and those polled by MarketWatch predicted a drop as great as 35%.
Mark Zandi, chief economist at Moody’s Analytics, remarked that the latest report “just highlights how deep and dark the hole is that the economy cratered into in Q2”.
“It’s a very deep and dark hole and we’re coming out of it, but it’s going to take a long time to get out,” he said.
Real GDP is the broadest measure of a country’s economic activity, with downturns reflecting significant disruption in spending. In the US’s case, the numbers reflect the closure of restaurants, retailers and other non-essential services in response to the COVID-19 pandemic that continues to spread throughout the country.