According to a report by the US Department of Commerce on Thursday, the fall in gross domestic product (GDP) for the period from April to June (2nd quarter) amounted to 32.9% compared with the same value last year.
Economists have noted that it is the strongest decrease since the government started to keep records in 1947, after World War II. Earlier in US history, GDP has never declined more than 10%.
However, a value of 32.9% was expected, since the average estimates of analysts were 34.1% drop in GDP.
Looking back on the first quarter (January-March 2020), the fall in GDP was only 5%, as the pandemic crisis in the country began in early March.
In June, National Bureau of Economic Research declared February 2020 the beginning of a recession in the United States and the end of an almost 11-year period of economic growth.
The pandemic has caused strong reduction in consumer spending, which accounts for about 70% of economic activity. Consumer costs in the second quarter decreased by 34% (compared to last year), as quarantine measures have “frozen” entire industries – such as tourism, aviation, the cruise industry, entertainment and restaurant companies. Americans have drastically reduced their visits to hospitals and health care costs.
Many factories and businesses were forced to reduce production and temporarily close. The crisis was exacerbated by falling oil prices because of overproduction and a sharp drop in demand. The country’s exports fell 64% in the second quarter, outpacing imports by 53%. Investment in various areas of business also declined sharply due to the uncertainty of the macroeconomic situation.
At the same time, inflation fell by 1.9% in the second quarter after rising at the beginning of the year. The cost of many goods and services has fallen as companies have lowered prices in an attempt to increase sales. Economists say that inflation is likely to remain low until the pandemic continues.
With each month of the second quarter, Experts’ optimistic assessments of the rapid recovery of the US economy have been replaced by predictions that it may take months or even years before the economy and trade fully recover.
The pandemic COVID-19 will be dictate the conditions, success in vaccine production, as well as US trade policy, especially with the largest partner of China.
The latest economic data for July showed that the pace of recovery has slowed due to a new outbreak in the southern and western states of the United States. Over the past two weeks deteriorated employment rates.
On Wednesday FRS announced the decision to keep rates zero and continue measures to support the economy.
An important issue in the United States remains the decision of Congress on additional unemployment benefits. This Friday the term of additional unemployment benefits expires in the amount of $ 600 per week, without this help Americans will face even greater decline in their incomes.
Another important news on Thursday was a statement of the President Donald Trump that he is looking for an opportunity to postpone the presidential election in November.
The president attributes this to the risks of infecting the population with COVID-19, at the same time, the Democrats’ proposal for remote voting is considered a risk of potential falsification of election results.
Trump has no power to postpone the election, but the Constitution gives Congress the right to set a voting date. But members of both factions said they see no likelihood that the elections will be postponed.
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