There was more bad news Thursday (July 30) as the U.S. economy experienced its worst hit since the Great Depression in the second quarter (Q2) as COVID-19 brought the country to a standstill for a second time.
The Bureau of Economic Analysis of the U.S. Department of Commerce reported the nation’s gross domestic product (GDP), the value of goods and services produced in the country, fell at an annual rate of nearly 33 percent from April to June.
Analysts said it is the biggest drop since the government started tracking the figures in 1947. In the first quarter (Q1), the Bureau reported GDP decreased 5 percent.
The Q2 decrease in GDP reflected less consumer spending, exports, inventory, business and housing investment that were partially offset by an increase in government spending, the report said. The dip in consumer spending reflected decreases in services led by healthcare and clothing and footwear. The decline in exports primarily reflected a decrease in goods.
Disposable personal income increased nearly 45 percent in Q2 after increasing 2.6 percent in the first quarter. The rise more than accounted for by an increase in Social Security benefits. At the same time, personal saving as a percent of disposable personal income was 25.7 percent in Q2 compared with 9.5 percent in Q1.
There was some good news for shoppers as the prices of goods and services purchased by U.S. residents dropped by 1.5 percent in Q2, after increasing 1.4 percent in the first quarter.
The report came at the same time U.S. jobless claims were 1.4 million for the second consecutive week, as the number of Americans filing for unemployment rose as new cases of COVID-19 continued to surge.
The U.S. Department of Labor (DOL) reported Thursday that the number of seasonally adjusted initial jobless claims was 1,434,000, up 12,000 from the previous week’s revised level. The previous week’s level was revised up by 6,000 from 1,416,000 to 1,422,000.