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As if you needed a reminder, the U.S. economy essentially imploded during the previous three months — at a rate four times the height of the Great Recession.
The U.S. gross domestic product (GDP) took a nosedive from April to June and shrank at an annual rate of just under 33 percent, according to advance data released by the Bureau of Economic Analysis. It’s a cataclysmic decline that indicates the wealthiest economy on Earth effectively fell off an economic cliff in the last three months.
The 32.9 percent drop is by far the worst since the federal government started tracking gross domestic product in 1947. The prior quarterly record was a -10 percent drop, in 1958. The steepest drop during the Great Recession was roughly a quarter of the numbers posted on Thursday.
"Horrific," economist Nariman Behravesh told NPR. "We've never seen anything quite like it.”
This is what that looks like in chart form:
The gross domestic product constitutes the value of all goods and services produced by the country during that time period. In the first quarter of this year, as the pandemic was just beginning to shut down the economy, the GDP shrunk by 5 percent. A Dow Jones forecast based on a survey of economists had predicted the hit for the second quarter would be as high as 35 percent.
The steep drop was caused by a near-complete collapse in personal spending, particularly in the early months of the quarter, when millions of Americans lost their jobs (and others feared losing theirs).
The GDP “reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending,” according to the Bureau of Economic Analysis.
Also on Thursday, the Department of Labor reported that 1.4 million Americans had filed new jobless claims within the last week, the 19th straight week that more than a million people had filed new claims and the second straight week numbers had increased after months of declining new initial claims. (Those numbers, of course, only reflects the number of people who were actually able to file their claims.)
More than 17 million Americans are currently receiving unemployment benefits, per the Department of Labor’s newest release.
In April, the government passed the CARES Act rescue package, which included $1200 “economic impact” payments, loans intended for companies to keep workers on their payroll through the Paycheck Protection Program, and $600 a week in unemployment benefits on top of what the state was paying out.
Those benefits will officially expire on Friday with no deal between Congress and the White House in sight.
Cover: Jmal Adame, right, hands a bag containing information about open positions, at a drive-thru job fair in Omaha, Neb., Wednesday, July 15, 2020. Nebraska reinstated job search requirements this week for most people claiming jobless benefits. Those unemployment insurance requirements were suspended in mid-March to help employees who had lost their jobs due to the Covid-19 coronavirus. (AP Photo/Nati Harnik)