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#US suffers economic blow as GDP sinks by annual rate of 32.9 percent

#US suffers economic blow as GDP sinks by annual rate of 32.9 percent

July 30, 2020 | 8:46am

The US economy suffered its worst blow since the Great Depression in the second quarter as the coronavirus crisis brought the country to a standstill, the feds said Thursday.

The nation’s gross domestic product — the value of all goods and services produced here — plunged by an annual rate of 32.9 percent from April to June, by far the largest drop since the government started tracking the figures in 1947.

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The worst of the economic collapse has likely passed given that states are no longer locked down as they were in the spring. But the recent surge in COVID-19 cases has made the path to recovery bumpy and uncertain, experts say.

“The scale and unprecedented nature of the Covid-19-driven downturn will leave lingering scars during the recovery,” Bloomberg economists Yelena Shulyatyeva and Eliza Winger said in a commentary.

The GDP decline reported by the US Department of Commerce was more than triple the previous record drop of 10 percent seen in the second quarter of 1958. It added to a 5 percent contraction seen in the first three months of the year, when the virus spread from China across the world.

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Most of the massive drop in economic activity came in April as officials across the country shuttered non-essential businesses and ordered people to stay home as much as possible. The shutdowns sparked massive layoffs, driving unemployment to a record 14.7 percent in April.

“This is on a par with the downturn experienced as World War Two concluded, but that occurred over three years, not two quarters, as is happening today,” ING chief international economist James Knightley said.

Several states began to lift those lockdowns in May and June, leading to a significant rebound in employment and consumer spending. Congress also helped stave off a more dire collapse by approving nearly $3 trillion in stimulus spending, including forgivable loans to small businesses, direct payments to taxpayers and expanded unemployment benefits.

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But the threat of the virus continues to weigh on economic activity as many states grapple with spikes in infections. Moreover, the fiscal aid approved in the spring is starting to run dry and lawmakers are reportedly deadlocked on a new spending package.

With Post wires

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