The US economy contracted at a 32.9% annual rate from April through June, its worst drop on record, the Bureau of Economic Analysis said Thursday.
But this is no ordinary recession. The combination of public health and economic crises is unprecedented, and numbers cannot fully convey the hardships millions of Americans are facing.
In April, more than 20 million American jobs vanished as businesses closed and most of the country was under stay-at-home orders. It was the biggest drop in jobs since record-keeping began more than 80 years ago. Claims for unemployment benefits skyrocketed and have still not recovered to pre-pandemic levels.
While the labor market has been rebounding since states began to reopen, bringing millions back to work, the country is still down nearly 15 million jobs since February. Next week’s July jobs report is expected to show another 2.3 million jobs added. That would bring the unemployment rate down to 10.3% — still higher than during the worst period of the financial crisis.
Consumer spending, the biggest driver of the US economy, declined at an annual rate of 34.6% — by far the sharpest decline on record.
The worst quarter ever
The pandemic pushed the economy off a cliff. The second-quarter GDP drop was nearly four times worse than during the peak of the financial crisis, when the economy contracted 8.4% in the fourth quarter of 2008.
Quarterly GDP numbers are expressed as an annualized rate. This means that the economy didn’t actually contract by one-third from the first quarter to the second. The annualized rate measures how much the economy would grow or shrink if conditions were to persist for 12 months.
Not annualized, GDP declined by 9.5% in between April and June, or by $1.8 trillion.
But by either measure, it was still the worst quarter on record.
The US only began keeping quarterly GDP records in 1947, so it’s difficult to compare the current downturn to the Great Depression.
