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Coronavirus pandemic pushes U.S. economy to worst-ever contraction

Jul. 30, 2020 12:31PM EST
 Dan Ackermann

The U.S. economy shrank at an annualized 32.9% rate in the second quarter — the worst-ever contraction with records dating back to 1947, the government said on Thursday.

Why it matters: Widespread lockdowns to contain the spread of the coronavirus pandemic from ravaged the economy in a way that's never been seen in modern times, and hope for a swift recovery has been dashed as cases have surged nationwide.

Between the lines: The staggering contraction beats the last record set in 1958, when GDP shrank at an annualized 10% rate.

Worth noting: U.S. government data always "annualizes" the quarterly GDP figures — meaning the number assumes the pace the economy grew or shrunk last quarter will continue over the year.

  • Because the economy experienced a swift, marked deterioration in the second quarter that's unlikely to be repeated, economists are also looking at another figure: GDP's percent change from the first quarter to the second.
  • Either figure you look at still shows an ugly, historic economic contraction.

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