The longer lawmakers delay, the risk increases that the stalled U.S. recovery will damage the global economy.
The historic economic data reported on Thursday confirmed the enormity of the second-quarter blow suffered by the global economy and the challenging road ahead. It comes when Congress in particular remains divided about how to support relief and reform policies. The longer lawmakers delay, the greater the risk that the stalled economic recovery will lead to a significant spike in unemployment and more business closings that would spread contractionary ripples to the rest of the global economy. According to the data released on Thursday morning, U. S. gross domestic product contracted by an astounding 32.9% when annualized in the second quarter. This far exceeds both the worst quarter of the 2007-09 recession (an 8.4% fall) and the previous record set in 1958 (a drop of 10%) for this data series. Once again, economists and Wall Street analysts are rushing to recalibrate the Y-axis for the country’s historical growth data. And the U. S. numbers are not the only reason — data coming out of Europe earlier Thursday are also having the same effect. The initial hope had been that the brutal March collapse in U. S. economic activity would be followed by a sharp recovery in the second and third quarters that would minimize the risk of short-term dislocations becoming deeply embedded problems that would be harder to solve in the long term. This hope for a quick V-shaped recovery has been increasingly called into question in recent weeks by high-frequency indicators that measure economic engagement.
