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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.

Cases: 304023

Reported Deaths: 3580
CountyCasesDeaths
Hennepin641421113
Ramsey27059502
Anoka21526225
Dakota21268190
Washington13529113
Stearns13524108
St. Louis8433108
Scott820154
Wright746139
Olmsted653534
Sherburne570941
Clay483956
Carver455913
Blue Earth405214
Rice403136
Kandiyohi396821
Crow Wing353431
Nobles304929
Chisago304410
Otter Tail300522
Benton293348
Winona273730
Mower257423
Douglas250735
Polk248923
Morrison228029
Lyon213411
Beltrami211917
McLeod205011
Becker199815
Goodhue196728
Steele19137
Itasca185523
Isanti184917
Todd178413
Carlton177715
Nicollet158725
Freeborn15125
Mille Lacs149931
Le Sueur144911
Cass138610
Waseca137811
Brown136415
Pine13138
Meeker12398
Roseau11454
Hubbard111924
Martin111220
Wabasha10301
Redwood91619
Chippewa8527
Dodge8380
Cottonwood8333
Watonwan8334
Renville83124
Wadena7736
Sibley7724
Rock7569
Aitkin75529
Pipestone71018
Houston6854
Fillmore6770
Yellow Medicine63311
Pennington6277
Kanabec59613
Murray5783
Swift5758
Faribault5422
Pope5281
Stevens5063
Clearwater5058
Jackson4841
Marshall4758
Lake4066
Koochiching3855
Wilkin3715
Unassigned36759
Lac qui Parle3613
Lincoln3511
Norman3417
Big Stone3072
Mahnomen2904
Grant2726
Kittson2138
Red Lake2053
Traverse1461
Lake of the Woods951
Cook660

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 225897

Reported Deaths: 2345
CountyCasesDeaths
Polk33451334
Linn14206164
Scott1116385
Black Hawk10849134
Woodbury10323124
Johnson948636
Dubuque918291
Story677621
Dallas633657
Pottawattamie624570
Sioux369125
Webster357833
Cerro Gordo351544
Marshall347846
Clinton327540
Buena Vista304114
Des Moines287920
Muscatine286468
Warren279611
Plymouth274242
Wapello255071
Jones229813
Jasper217443
Marion204320
Lee202217
Carroll197322
Bremer194212
Henry18227
Crawford174316
Benton169519
Tama153840
Jackson144313
Delaware143221
Washington140214
Dickinson138210
Boone136311
Mahaska126727
Wright12336
Clay11714
Buchanan116410
Hardin115010
Page11294
Clayton11105
Hamilton11059
Cedar107413
Harrison106729
Calhoun10617
Kossuth10566
Floyd104116
Mills10407
Fayette103310
Lyon10268
Butler10116
Poweshiek98913
Winneshiek96212
Iowa94612
Winnebago91723
Hancock8607
Louisa85816
Sac8578
Grundy85611
Chickasaw8494
Cherokee8374
Cass80823
Allamakee79911
Mitchell7884
Appanoose78710
Humboldt7695
Union7676
Shelby76211
Emmet76024
Guthrie75215
Franklin73521
Jefferson7112
Madison6804
Unassigned6620
Palo Alto6514
Keokuk5967
Pocahontas5574
Howard5529
Greene5220
Osceola5211
Ida48713
Clarke4824
Taylor4643
Montgomery46211
Davis4619
Monroe44312
Adair4408
Monona4332
Fremont3573
Van Buren3555
Worth3550
Lucas3236
Decatur3160
Wayne2987
Audubon2952
Ringgold2112
Adams1692
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