BALTIMORE (AP) —
The U.S. economy shrank at an alarming annual charge of 31.7% in the course of the April-June quarter because it struggled beneath the weight of the viral pandemic, the federal government estimated Thursday. It was the sharpest quarterly drop on file.
The Commerce Department downgraded its earlier estimate of the U.S. gross home product final quarter, discovering that the devastation was barely lower than the 32.9% annualized contraction it had estimated on the finish of July. The earlier worst quarterly drop since record-keeping started in 1947 was a ten% annualized loss in 1958.
Last quarter, companies shuttered and tens of millions of employees misplaced jobs because the world’s largest economy went into lockdown mode in what succeeded solely fitfully in limiting the unfold of reported viral infections. The U.S. economy fell an annualized 5% in the primary three months of the yr because the coronavirus started to make its presence felt in February and March.
A bounce-back in hiring as many companies reopened advised that the economy started to get well in June with third quarter progress estimated to be round 20% annualized. But economists say a full restoration stays far off provided that the virus has but to be contained and the federal government’s monetary help has pale.
“As we approach the fall, we see four important risks for the economy: a failure to provide further fiscal stimulus, a second wave of COVID-19 infection during the flu season, major election uncertainty and rising trade tensions with China,” mentioned Lydia Boussour, senior U.S. economist at Oxford Economics.
Unemployment continues to be excessive at 10.2%, and roughly 1 million persons are making use of for jobless help every week whilst the quantity of help they obtain has shrunk. Consumer confidence has tumbled. Though the inventory market and residential gross sales are surging, the broader economy exhibits indicators of stalling, and tens of millions face potential evictions from their houses.
The challenges replicate the bizarre nature of the downturn. Many U.S. households have elevated their financial savings and paid off debt—which may both sign a hesitancy to spend as they’ve in the previous or pent-up demand that might be unleashed as soon as the pandemic ends.