WASHINGTON (AP) – The US economy collapsed at a record pace in the spring, but is ready to move to a record increase in the quarter, which has just ended.
The trade ministry said on Wednesday that gross domestic product, total output of goods and services in the economy, fell 31.4% in the April-June quarter, changing only slightly from a 31.7% drop estimated a month ago. .
The new report, the government’s last look in the second quarter, shows a decline that is more than three times the previous record, a 10 percent drop in the first quarter of 1
Economists estimate that the economy will expand by 30% a year this quarter as business reopens and millions return to work. That would break the old record of three-month GDP growth – a 16.7 percent jump in the first quarter of 1950, when Harry Truman was president.
The government will publish its GDP report from July to September to October 29, just five days before the presidential election.
While President Donald Trump is counting on economic recovery to persuade voters to give him a second term, economists say any such rebound this year is a long experience.
Economists predict that growth will slow significantly in the last three months of this year to a rate of about 4% and may in fact return to recession if Congress fails to adopt another stimulus or if there is a revival of COVID-19. In some regions of the country, including New York, infections are currently occurring.
“There are a lot of potential pitfalls out there,” said Gus Foscher, chief economist at PNC Financial Services. “We are still dealing with a number of significant reductions due to the pandemic.”
He said that in addition to the possibility of Congress not receiving additional stimulus support due to the sharp divide between Democrats and Republicans over how much more is needed, there are other threats in the form of uncertainty about the upcoming election.
“All this political uncertainty has the potential to weigh on economic growth,” Fosher said.
The Trump administration says there will be steady growth in the coming quarters that will restore all production lost by the pandemic.
So far this year, the economy has shrunk by 5% in the first quarter, marking the end of nearly 11 years of economic expansion, the longest in US history. This decline was followed by a second quarter decline of 31.4%, which was initially estimated two months ago as a decline of 32.9% and then revised to 31.7% last month.
The slight upward revision in this report reflects less decline in consumer spending than estimated. It was still a record decline at a rate of 33.2%, but forecasts for last month were a decline of 34.1%. This improvement was offset to some extent by downward revisions to exports and business investment.