Shomporko Desk:-The U.S. economy contracted at its steepest pace since the Great Depression in the subsequent quarter, as the COVID-19 pandemic broke buyer and business spending, and an incipient recuperation is under danger from a resurgence in new instances of coronavirus.
Total national output crumbled at a 32.9 percent annualized rate last quarter, the most profound decrease in yield since the administration began keeping records in 1947, the Commerce Department said on Thursday.
The drop in GDP was more than triple the past unequalled decay of 10 percent in the second quarter of 1958. The economy contracted at a five percent pace in the main quarter.
Financial experts surveyed by Reuters had estimate GDP plunging at a 34.1 percent rate in the April-June quarter.
The bulk of the historic tumble in GDP occurred in April, when activity ground to an abrupt halt after restaurants, bars and factories, among others, were shuttered in mid-March to slow the spread of the coronavirus.
“After the worst quarter on record, the economy is still wrestling with the misery and uncertainty caused by the coronavirus,” BMO economist Sal Guatieri said of the numbers. “While the recovery is underway, it will take a long time before the economy recovers.”
Federal Reserve Chair Jerome Powell on Wednesday acknowledged the slowdown inactivity. The U.S. central bank kept interest rates near zero and pledged to continue pumping money into the economy.
President Donald Trump, whose opinion poll numbers have tanked as he struggles to manage the pandemic, economic crisis and protests over racial injustice three months before the Nov. 3 election, said on Wednesday he was in no hurry.
Economists say without the historic fiscal package of nearly $3 trillion US, the economic contraction would have been deeper. The package offered companies help in paying wages and gave millions of unemployed Americans a weekly $600 supplement, which expires on Saturday. Many companies have exhausted their loans.
This, together with the sky-rocketing coronavirus infections, is keeping layoffs elevated. In a separate report on Thursday, the Labour Department said initial claims for unemployment benefits totalled 1.434 million in the week ending July 25.
Photo credit: ALEX WONG—GETTY IMAGES
News source: Reuters