US economy shrank at record-breaking rate last as unemployment surges

The U.S. economy shrank at a dizzying 33% 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.

Posted: Jul 30, 2020 8:01 AM
Updated: Jul 30, 2020 10:33 AM

WASHINGTON (AP) — The U.S. economy shrank at a dizzying 33% 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.

Last quarter’s drop followed a 5% fall in the January-March quarter, during which the economy officially entered a recession triggered by the virus, ending an 11-year economic expansion, the longest on record in the United States.

The contraction last quarter was driven by a deep pullback in consumer spending, which accounts for about 70% of economic activity. Spending by consumers collapsed at a 34% annual rate as travel all but froze and shutdown orders forced many restaurants, bars, entertainment venues and other retail establishments to close.

Business investment and residential housing also suffered sharp declines last quarter. Government spending, diminished by a loss of tax revenue that forced layoffs, also fell.

The job market, the most important pillar of the economy, has been severely damaged. Tens of millions of jobs vanished in the recession. More than 1 million laid-off people have applied for unemployment benefits for 18 straight weeks. So far, about one-third of the lost jobs have been recovered, but the resurgent virus will likely slow further gains in the job market.

President Donald Trump has pressured states to reopen businesses despite concerns that the virus remains a threat to workers and customers at many service industry jobs that require frequent face-to-face contact.

So dizzying was the contraction last quarter that most analysts expect the economy to produce a sharp bounce-back in the current July-September quarter, perhaps of as much as 17% or higher on an annual basis. Yet with the rate of confirmed coronavirus cases having surged in a majority of states, more businesses being forced to pull back on re-openings and the Republican Senate proposing to scale back government aid to the unemployed, the economy could worsen in the months ahead.

The Trump administration is betting against that outcome in asserting that the economy will undergo a V-shaped recovery in which last quarter’s plunge would be followed by an impressive rebound in the current quarter — a hoped-for dose of good news that would be reported in late October, not long before Election Day.

Yet many economists note that the economy can’t fully recover until the pandemic is defeated — a point stressed Wednesday at a news conference by Federal Reserve Chair Jerome Powell. The Fed chairman warned that the viral epidemic has been endangering a modest economic recovery and that as a result, the Fed plans to keep interest rates pinned near zero well into the future.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 56560

Reported Deaths: 1656
CountyConfirmedDeaths
Hennepin18009819
Ramsey6944261
Dakota3991103
Anoka3365113
Stearns283120
Washington191743
Nobles17466
Olmsted162923
Scott139014
Mower10812
Rice9998
Blue Earth8525
Wright8135
Carver7792
Clay74540
Kandiyohi6761
Sherburne6497
St. Louis43619
Todd4202
Lyon4163
Freeborn3541
Steele3301
Nicollet31213
Benton3063
Watonwan2980
Winona24716
Crow Wing21313
Martin2045
Le Sueur2011
Beltrami1930
Chisago1791
Goodhue1768
Otter Tail1763
Cottonwood1710
Becker1431
Pipestone1439
Unassigned14040
McLeod1380
Itasca13212
Polk1313
Douglas1300
Waseca1280
Pine1270
Carlton1250
Dodge1230
Murray1221
Isanti1100
Chippewa981
Brown852
Faribault830
Meeker832
Morrison831
Wabasha810
Sibley792
Koochiching743
Rock740
Pennington721
Jackson700
Mille Lacs653
Fillmore610
Renville595
Cass582
Lincoln540
Swift521
Grant491
Yellow Medicine490
Roseau460
Pope430
Houston390
Norman340
Redwood300
Kanabec291
Hubbard280
Marshall280
Wilkin283
Aitkin270
Mahnomen231
Wadena230
Big Stone220
Red Lake200
Lake180
Clearwater150
Stevens150
Traverse100
Lac qui Parle60
Kittson40
Cook20
Lake of the Woods10

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 45774

Reported Deaths: 883
CountyConfirmedDeaths
Polk9723203
Woodbury365151
Black Hawk300362
Linn210887
Johnson193315
Dallas178935
Buena Vista178512
Scott159312
Dubuque153729
Marshall138924
Pottawattamie121723
Story110914
Wapello84932
Muscatine82648
Webster7255
Crawford7193
Sioux5952
Cerro Gordo57617
Tama53729
Warren5281
Jasper45524
Plymouth4438
Wright4431
Louisa37914
Dickinson3754
Clinton3173
Washington28710
Hamilton2411
Boone2282
Franklin2205
Bremer1877
Clarke1863
Carroll1811
Emmet1791
Clay1711
Hardin1650
Shelby1611
Marion1530
Allamakee1514
Poweshiek1468
Benton1431
Jackson1411
Des Moines1392
Mahaska13617
Floyd1292
Guthrie1265
Jones1242
Cedar1201
Hancock1172
Butler1142
Henry1133
Pocahontas1131
Buchanan1111
Lyon1020
Madison1022
Clayton983
Cherokee971
Harrison970
Lee953
Taylor930
Humboldt921
Delaware901
Monona900
Iowa891
Winneshiek851
Calhoun822
Mills820
Fayette810
Sac810
Palo Alto790
Kossuth780
Jefferson770
Osceola770
Mitchell760
Page760
Winnebago760
Grundy741
Union701
Monroe677
Worth610
Chickasaw510
Cass481
Davis481
Howard480
Lucas454
Montgomery433
Appanoose423
Greene380
Fremont350
Van Buren321
Keokuk301
Ida290
Audubon281
Decatur220
Adair210
Ringgold211
Adams160
Wayne161
Unassigned80
Rochester
Scattered Clouds
72° wxIcon
Hi: 73° Lo: 52°
Feels Like: 72°
Mason City
Clear
73° wxIcon
Hi: 74° Lo: 51°
Feels Like: 73°
Albert Lea
Scattered Clouds
73° wxIcon
Hi: 73° Lo: 52°
Feels Like: 73°
Austin
Scattered Clouds
73° wxIcon
Hi: 74° Lo: 51°
Feels Like: 73°
Charles City
Broken Clouds
72° wxIcon
Hi: 73° Lo: 50°
Feels Like: 72°
Rain returns for Wednesday
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Seans Weather 8/4

Image

Driving schools adjust to virtual classes

Image

Back to school listening session for Rochester parents

Image

New Location for Day Center

Image

Looking Ahead: Relay for Life on Sat.

Image

Rochester Awards CARES Act Funding

Image

Ballot Question About Park Funding

Image

School District to Implement Mask Mandate

Image

Honkers fall short to Willmar

Image

A fitting farewell to a member of greatest generation

Community Events