Previously, GDP had never shrunk by more than 10% on an annualized basis in any quarter since the government began keeping track shortly after World War Two
The numbers: An economy badly battered by the coronavirus shrank at a record 32.9% annual pace in the second quarter, underscoring just how big a hole the U.S. finds itself in as it labors to recover from the deepest recession in American history.
The recent surge in coronavirus cases in about half of U.S. states, especially large ones such as Texas, Florida and California, has also dealt a blow to a fragile economic recovery.Previously GDP had never shrunk by more than 10% on an annualized basis in any quarter since the government began keeping track shortly after World War Two.
Households also spent far less on goods, though the decline wasn’t quite as steep. Purchases dropped 11.3%. Americans bought more cars, groceries and certain other household staples with many working from home, but sales of clothing, gasoline and many other goods all fell sharply.Business investment also stumbled badly as companies froze or slashed spending. Outlays on infrastructure such as oil rigs sank 35% while spending on equipment shrank by 37.7%. Both are record declines.
Companies cut back on production as sales slumped and exports tumbled. That’s also weighed heavily on the economy, though production has picked up in the last few months after the economy largely reopened. The rate of inflation, meanwhile, fell at a 1.9% pace in the second quarter after increasing early in the year. The cost of many goods and services have fallen as companies cut prices to try to drum up sales. Inflation is likely to remain low until the pandemic fades.
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