In the second quarter of 2020, the American economy experienced a record decline since the Great Depression.
Reuters writes about it.
Most of the historical decline in gross domestic product falls on April, when due to quarantine economic activity was paralyzed. Although in May activity began to resume, new outbreaks of coronavirus destroyed all hopes for a rapid recovery in the third quarter, destroying more than five years of economic growth.
Although activity has increased since May, the momentum has slowed as new cases recommenced, particularly in densely populated regions in the south and west, where authorities in heavily affected areas are closing businesses again or suspending the resumption of operations. This has held back hopes for a sharp recovery in growth in the third quarter.
The head of the Federal Reserve, Jerome Powell, has already admitted the previous day that activity is slowing down again. At the same time, a survey of economists conducted by the agency “Reuters” shows that the U.S. GDP fell by 34.1% year-on-year.
“If this is the case, it will destroy more than five years of growth and bring real GDP back to its levels, which was last seen in mid-2014,” – commented on the situation Lou Crandall, chief economist at Wrightson ICAP.
In the spring, Washington approved a $3 trillion state aid package in an effort to compensate for the historic economic downturn. However, it had little effect on the situation. In the end, companies have already exhausted government loans, which means they have nothing to pay their salaries. Along with the spread of coronavirus, this could lead to increased layoffs.
According to forecasts, between July 19 and 25, the number of new applications for unemployment benefits increased to 1.45 million. The official statistics of the Ministry of Labor will be presented on Thursday.