The US economy shrank at an alarming annual rate of 31.7% during the April-June quarter as it struggled under the weight of the pandemic.
The Commerce Department downgraded its earlier estimate of the US gross domestic product last quarter, finding the devastation was slightly less than the 32.9% annualised contraction it had estimated at the end of July.
It was the sharpest quarterly drop on record, with the previous worst quarterly fall since record-keeping began in 1947 a 10% annualised loss in 1958.
In the last quarter, businesses closed and millions of workers lost their jobs as the world’s largest economy went into lockdown mode in what succeeded only fitfully in limiting the spread of reported viral infections.
10.2% US unemployment rate
The US economy fell an annualised 5% in the first three months of the year as the coronavirus pandemic began to make its presence felt in February and March.
A bounce-back in hiring as many businesses reopened suggested the economy began to recover in June, with third quarter growth estimated to be around 20% annualised. But economists say a full recovery remains far off given the virus has yet to be contained and the government’s financial support has faded.
Lydia Boussour, a senior US economist at Oxford Economics, said: “As we approach the fall, we see four important risks for the economy: a failure to provide further fiscal stimulus, a second wave of Covid-19 infection during the flu season, major election uncertainty and rising trade tensions with China.”
Unemployment is still high at 10.2%, and roughly one million people are applying for jobless aid each week even as the amount of aid they receive has shrunk.
Though the stock market and home sales are surging, the broader economy shows signs of stalling, and millions face potential evictions from their homes.