WASHINGTON (Reuters) – The U.S. economy suffered its sharpest contraction in at least 73 years in the second quarter because of the disruptions from the coronavirus, the government confirmed on Wednesday.
Gross domestic product plunged at a 31.4% annualized rate last quarter, the deepest drop in output since the government started keeping records in 1947, the Commerce Department said in its third estimate of GDP. Output was previously reported to have contracted at a 31.7% pace in the second quarter.
The number of Americans who filed new claims for unemployment benefits last week totaled 1.434 million, the Labor Department reported Thursday, roughly in line with expectations, as the coronavirus pandemic continues to ravage the U.S. economy. It was the 19th straight week in which initial claims totaled at least 1 million and the second consecutive week in which initial claims rose after declining for 15 straight weeks.
Economists polled by Dow Jones had expected claims to rise to 1.45 million for the week ending July 25.
In a separate report, the government said second-quarter gross domestic product plunged a historic 32.9% on an annualized basis. Although it wasn’t as bad as the expected 34.7% decline, it was the worst drop ever, with the closest previously coming in mid-1921.
WASHINGTON (AP) — The U.S. economy shrank at a dizzying 32.9% annual rate in the April-June quarter — by far the worst quarterly plunge ever — when the viral outbreak shut down businesses, throwing tens of millions out of work and sending unemployment surging to 14.7%, the government said Thursday.
The Commerce Department’s estimate of the second-quarter decline in the gross domestic product, the total output of goods and services, marked the sharpest such drop on records dating to 1947. The previous worst quarterly contraction, a 10% drop, occurred in 1958 during the Eisenhower administration.
Tens of millions of Americans who lost their jobs because of the pandemic are now in danger of having their incomes slashed for a second time. The supplemental unemployment benefits of $600 per week that Congress approved four months ago are set to expire in less than two weeks — threatening to hurt strapped households and the U.S. economy, as billions of dollars’ worth in spending suddenly comes to a halt.
As Congress comes back into session this week, lawmakers will debate whether to extend the supplemental benefits, which have been a lifeline for more than 30 million people across the United States.
“The extra $600 from the government has obviously helped me tremendously,” said bartender Courtney Woodruff, who lost her job at a Denver brewpub. “I don’t really spend a lot. My money is going towards rent and food right now.
“While ordinary unemployment benefits usually cover just a fraction of a worker’s lost wages, the additional $600 per week from the federal government was designed to fully replace the average worker’s missing paycheck.