The U.S. economy recorded its largest ever plunge in activity during this year’s second quarter, according to data released Thursday by the Commerce Department’s Bureau of Economic Analysis.
What are the details?
Gross Domestic Product, the combined tally of all goods and services produced, fell a colossal 32.9% between April and June as many Americans were forced out of work and asked to stay home as the coronavirus pandemic raged.
The plunge, however, was not quite as bad as predicted. Economists surveyed by Dow Jones had expected a 34.7% drop.
Still, the drop is the worst ever, CNBC reported, with the second worst coming in mid-1921.
In short, the coronavirus pandemic and subsequent lockdown orders happened.
According to CNBC, “sharp contractions in personal consumption, exports, inventories, investment and spending by state and local governments all converged to bring down GDP.”
MarketWatch highlighted the 34.6% decline in consumer spending, which is the main engine of the economy, as the primary reason for the plunge.
That decline was especially noticed in service industries — such as travel and tourism, bars and restaurants, and medical services — which saw spending nosedive 43.5%
While a recovery appeared to begin in May when the country recorded the largest month-to-month jobs increase ever, the positive numbers were unable to offset the historic decline the U.S. economy experienced at the start of the pandemic.
Now, on the heels of the second-quarter news, some economists are forecasting a long and arduous recovery.
“[The report] just highlights how deep and dark the hole is that the economy cratered into in Q2,” Mark Zandi, the chief economist at Moody’s Analytics, told CNBC. “It’s a very deep and dark hole and we’re coming out of it, but it’s going to take a long time to get out.”
Others, such as Peter Boockvar, chief investment officer at the Bleakley Advisory Group, are taking a bit more positive approach.
Boockvar told CNBC that while the numbers are “alarming,” they are also “all self inflicted with about half the quarter reflecting almost full shutdown and the other half the slow reopening.”
Economists surveyed by MarketWatch had already predicted an 18% comeback for the third quarter. With the second quarter news, that number might be notched down slightly, but the outlet notes that the economy is still “primed to expand.”