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US economy collapsed 32.9 percent Q2 amid pandemic: government

30 July 2020, MVT 19:10
(FILES) In this file a trader makes a phone call outside the New York Stock Exchange (NYSE) on July 20, 2020 at Wall Street in New York City. - Wall Street stocks dropped in opening trading on July 30, 2020 following data showing an historic drop in US growth in the second quarter and higher weekly jobless claims. Shortly after the opening bell, the Dow Jones Industrial Average was down 1.2 percent at 26,215.34.The broad-based S&P 500 fell 1.1 percent to 3,223.42, while the tech-rich Nasdaq Composite Index shed 0.9 percent to 10,446.97. (Photo by Johannes EISELE / AFP)
30 July 2020, MVT 19:10

The US economy collapsed in the midst of the coronavirus pandemic in the April-to-June period, contracting 32.9 percent in the second quarter, the government reported Thursday.

The decline, though slightly less bad than expected, was the worst on record for the world's largest economy, dating back to 1947.

However, the Commerce Department figures are an annual rate so not comparable to the quarterly contractions reported in other advanced economies.

Compared to the same quarter of 2019, economic activity fell 9.5 percent.

The plunge in GDP was driven largely by the drop in consumer spending, the largest component, which fell 34.6 percent annualized, according to the first estimate for the second quarter.

After a 5.0 percent drop in the first three months of the year, economists had been expecting the damage from COVID-19 to contract activity by 35 percent or more amid the nationwide halt to travel and much business, which caused tens of millions of jobs to be destroyed.

The data show trade also took a huge hit, with exports falling just over 64 percent, and imports down 53.4 percent.

But personal income got a boost of $1.4 trillion in the quarter from the government emergency spending measures that provided payroll funds for businesses and direct unemployment payments to workers.

The annualized data assumes the damage wrought in a single quarter will play out over the entire year, but economists expect a rebound in coming months.

However, the hopeful signs in May and June have given way amid a resurgence of virus cases in July that has forced authorities in some states to reimpose restrictions.

US stocks futures were down a bit less than one percent following the data.

Washington, United States | AFP