U.S. GDP in April-June shrinks at record 32.9% pace amid pandemic

31, Jul. 2020

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WASHINGTON, Kyodo - The U.S. economy dived an annualized real 32.9 percent in the April to June period amid the coronavirus pandemic, the worst quarterly deterioration since comparable data became available in 1947, the Commerce Department said Thursday.

The contraction in terms of inflation-adjusted gross domestic product, which followed a 5 percent drop in the preceding quarter, underscored the devastating impact of the public health crisis that has led to the widespread shuttering of businesses and stay-at-home orders in an effort to slow the spread of the virus.

Even at the height of the global financial crisis triggered by the collapse of Lehman Brothers, the GDP decline was no more than 8.4 percent, reported in the final quarter of 2008. The previous worst drop in quarterly records was a 10.0 percent slide marked in 1958.

According to the department, private consumption, which accounts for two-thirds of the world's largest economy, was down a record 34.6 percent in the April-June period after shrinking 6.9 percent in the January-March period.

Nonresidential private investment, a measure of business spending, plunged 27.0 percent, following a decline of 6.7 percent.

Exports fell 64.1 percent after declining 9.5 percent in the preceding quarter, and imports plunged 53.4 percent compared with a drop of 15.0 percent.

Government spending expanded 2.7 percent, up from a 1.3 percent growth the previous period.

The U.S. economy is expected to show some rebound in the July-September quarter as the country began reopening businesses and relaxed social-distancing restrictions from late April.

But coronavirus cases began to surge in parts of the economy from mid-June and led some states to pause their reopening or reimpose restrictions to slow the spread of the virus.

Federal Reserve Chairman Jerome Powell warned on Wednesday that the recent resurgence in coronavirus cases seems to be slowing the pace of the recovery of the world's largest economy.

GDP measures the total output of goods and services within a country's borders. The April-June figure was better than the market forecast of a 34.1 percent decline. (Kyodo)