In the second quarter of 2020, the U.S. economy experienced the biggest shock since the great depression, because coronavirus crisis has slowed the country’s economic growth, said Federal authorities on Thursday, July 30, writes the New York Post.
According to the U.S. Commerce Department, gross domestic product — the value of all produced goods and services in the second quarter was 9.5% less than in the first, which is a stunning leap according to historical data from the National Bureau of economic research, since 1875.
According to the latest The Washington Post, the last period of similar decline was observed in the last quarter of 1937, in the later stages of the great depression — then, a decline of approximately 7.2%.
Compared to the previous quarter, GDP fell by 32.9% for the three months ended in June, the largest fall since since the government began tracking the figures in 1947. This fall more than tripled the previous record of 10% observed in the second quarter of 1958 and added to a 5% reduction in the first three months of 2020, when the virus spread from China around the world.
A record decline occurred despite the fact that the States are no longer closed, as it was in the spring. But the recent surge of cases COVID-19 complicate the incipient recovery of the economy, experts say.
“I think that’s the number… marks the end of the recession, but the recovery in any case will not be quick,’ said a senior economist at Bloomberg Economics Elena Solatia. — It will be overcast, and ahead of a long and bumpy road”.
Each sector of the economy, with the exception of Federal government spending in the last quarter declined, including consumer spending, which fell by 34.6% in the year.
Most of the decline occurred in April, when officials across the country shut down nonessential businesses and ordered people to stay longer at home. The dismissal led to the fact that the unemployment rate reached a record 14.7% in the same month.
“Even if in the third quarter the recovery will occur with double-digit acceleration, what we hope, we still will not approach the place where we were,” says chief economist at Grant Thornton and Advisor to the Federal reserve Diana swank.
Several States have begun to remove the locks in may and June, which led to a considerable growth in employment and consumer spending. The Congress also helped to prevent a terrible collapse by approving nearly $3 trillion in stimulus spending, including concessional loans for small businesses, direct payments to taxpayers and extended unemployment benefits.
“The question is how much of the recovery in may, in June is simply the result of pent up demand from consumers, who came out of isolation, said Chris Rupke, chief financial economist at MUFG Union Bank. — So we don’t know whether to continue.”
The threat of the virus continues to weigh on economic activity, since many States are faced with a sharp drop in infections. In addition, the financial assistance approved in the spring, begins to dwindle, and Federal legislators are reported to have stalled because of the new package costs.
“Congress was hoping it was a transient event, said swank. I think it’s important to recognize how big a shock.”
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IN THE UNITED STATES
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