Saturday, 08 August, 2020

Eurozone GDP Shows Record 12.1% Slump in Q2 2020, Eurostat Reports

US GDP contracted by a record-shattering 32.9% pace last quarter U.S. GDP Falls 33 Percent, The Worst Recorded In American History
Ginger Lawrence | 02 August, 2020, 14:08

Before coronavirus lockdowns swept the nation in March, the worst reading on United States gross domestic product (GDP) - which measures the value of all the goods and services produced in the economy - had been recorded in 1950, when the U.S. economy shrank 10 percent in the first quarter.

Last quarter's drop followed a 5.0 per cent 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 US economy plunged a staggering 32.9 percent from April through June on an annualised basis, the Bureau of Economic Analysis reported - by far the worst contraction on record.

Labor Department data indicated a second straight increase in initial claims for jobless benefits last week following several weeks of declines, prompting renewed calls for Congress to quickly approve a new round of emergency spending to support the economy. The drop in GDP was more than triple the previous all-time decline of 10 percent in the second quarter of 1958.

Before the pandemic, consumer spending drove two-thirds of U.S. economic activity.

"This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending", it declared, adding, "The full economic effects of the COVID-19 pandemic can not be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and can not be separately identified".

A plunge in exports, inventories, business and residential investment, as well as state and local government spending, also contributed to the historic weakness. Spending by consumers collapsed at a 34.6 per cent annual rate as travel all but froze and shutdown orders forced many restaurants, bars, entertainment venues and other retail establishments to close.

Analysts at Capital Economics said they were expecting the Spanish economy to contract by 12 percent this year "with a return to pre-virus size years away".

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The United States, which accused the organisation of being too close to China, officially began its withdrawal from the organisation in July.

It was the sharpest decline since Germany began producing quarterly growth figures in 1970.

The figure is up on June's 0.3% but is still well off the European Central Bank's target of just below 2%, according to Eurostat.

That has led to mammoth job losses. Tens of millions of jobs vanished in the recession.

"We have to consolidate the recovery and for that, it is essential to contain the new outbreaks", she said. 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.

Adding to the economic gloom was a disappointing jobless claims report, also released Thursday, which showed that initial weekly unemployment filings rose for the second straight week after steadily falling from its March peak of nearly 7 million.

Spain has recorded an even sharper 18.5% dive.

Roughly 30 million Americans are collecting unemployment benefits from state and federal programmes - but their income is set to tumble dramatically.