U.S. Gross Domestic Product Decreased at an Annual Rate of 32.9% in the Second Quarter of 2020
The economic recovery seems to be slow and unpredictable as experts are uncertain what kind of a recovery shape the US economy will be experiencing while a new wave of confirmed cases in the summer leads some states to re-impose restrictions.
The U.S. Department of Commerce released a report on July 30 that the “Real gross domestic product (GDP) decreased at an annual rate of 32.9 % in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis.” This downturn is a 9.5% drop in GDP compared to the first quarter. In the first quarter, the real GDP decreased by 5.0%.
The Department of Labor also noted an increase in the number of jobless claims after a decreasing trend for the past months. In the week ending July 25, the seasonally adjusted initial claims increased by 12,000 to 1.433 million claims compared to the previous week. In the week ending July 11, the claims rose 867,000 from the prior week.
The decline in the GDP in the second quarter is a result of the precautionary measures taken to contain the spread of the virus and shocks caused by Covid-19. Businesses, schools, factories, and restaurants are shut down due to the imposed restrictions by many states in March and April. As a result, there is a change in consumer spending causing many companies struggling to stay afloat while some big companies already filed for bankruptcy throughout the second quarter of this year.
According to the data compiled by John Hopkins University, the US has 4.49 million confirmed cases and 152,000 deaths as of July 29. The country reached 3 million cases on July 8. This means the country has almost an additional 1.5 million cases in about three weeks. Earlier in March and April, New York State has the greatest number of cases, but now California and Florida have surpassed New York.
Sources: Bureau of Economic Analysis (BEA), U.S. Department of Labor (DOL), John Hopkins University
By: Noeut Sokhoeun