US Economy Shrinks 31.7 Percent in the second quarter! This shrinkage of 5% in the USA has occurred with a significant record 70 years later! The USA, which saw the tremendous negative impact of the Covid-19 outbreak in the second quarter of the year, consumption has decreased, primarily due to the corona crisis!
The economic slump in the US in the second quarter was somewhat less severe than previously estimated in the wake of the pandemic. As the Ministry of Commerce announced in a second publication, the gross domestic product (GDP) fell by 31.7 percent compared to the previous quarter. In a first estimate, the ministry had reported a minus of 32.9 percent.
Economists polled by research done had expected GDP to decline by 32.4 percent. In the first quarter, the US economy had shrunk by 5.0 percent. The second quarter’s economic output decline was the largest drop in more than 70 years of records.
Revised consumer spending slumped by 34.1 (preliminary: 34.6) percent. The deflator for personal consumption expenditure (PCE) favored by the US Federal Reserve as a measure of inflation fell 1.8 percent after an increase of 1.3 percent in the previous quarter.
The GDP deflator fell by 2.0 percent after a plus of 1.4 percent in the previous quarter. Economists had expected a minus of 1.8 percent. The GDP deflator measures price developments based on all goods and services produced. In contrast, consumer prices are collected using a representative shopping basket.
The decline in personal consumption expenditures, exports, foreign fixed investment, private stock investment, and local government spending was partly offset by the rise in federal government spending, which was decisive in the US economy’s contraction during this period.
Besides, the number of weekly applications for state unemployment benefits rose again. A total of 1.434 million citizens submitted a corresponding initial application last week, as the Ministry of Labor announced. The number of unemployed rose exorbitantly during the crisis. A total of 17 million people are currently receiving unemployment benefits in the United States.
US Economy Shrinks 31.7 Percent in the second quarter!