Just when the economy can’t take any more bad news, the Federal Reserve Bank of Atlanta is predicting the national gross domestic product (GDP) is expected to drop by nearly 43 percent in the second quarter, CNBC reported.
If the Atlanta Fed is correct, the drop in GDP, the sum of goods and services across the economy, would be the worst since World War II.
When examined together, the Federal Reserve Bank of Atlanta sees personal consumption expenditures, which comprise 68 percent of GDP, falling by 43.6 percent in Q2, down from the May 8 estimate of 33.9 percent. Gross private domestic investment, which is 17 percent of GDP, is expected to plunge by 69.4 percent, down from a 62.8 percent estimate a week ago.
Just one week ago, the Atlanta Fed’s tracker, GDPNow, estimated the drop for the period from April through June would be 35 percent.
But as more unsettling economic data has piled up amid the continuing coronavirus pandemic, the central bank adjusted its estimate.
Jobless claims for the week ending May 9 were 2.98 million, the U.S. Bureau of Labor Statistics reported on Thursday (May 14). That pushed the total number of claims filed since COVID-19 began to a record 36.5 million.
During the week ending April 25, there were 23 states that reported 3.4 million people claimed Pandemic Unemployment Assistance benefits, according to the Bureau of Labor Statistics. In addition, 13 states reported that 79,538 people filed for pandemic unemployment.
The U.S. Census Bureau reported Friday (May 15) that retail sales collapsed 16 percent in April, worse than the 12 percent economists surveyed by Dow Jones had been forecasting, CNBC reported.
GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available data for the period measured.