More businesses have had to shut down again as virus cases rise, undermining the nascent United States recovery. That's by far the worst plunge ever recorded, based on Bureau of Economic Analysis (BEA) data spanning back to 1947.
And while President Donald Trump continues to promise a dramatic recovery, Covid-19 cases have resurged in recent weeks, eroding early signs of a rebound and forcing authorities in some states to reimpose restrictions.
That decline was especially noticed in service industries - such as travel and tourism, bars and restaurants, and medical services - which saw spending nosedive 43.5%.More news: United States government to launch 'overwhelming' Covid-19 vaccine campaign by November
U.S. Gross Domestic Product (GDP), percent change from the preceding quarter, seasonally-adjusted, annualized. Taken all together, the American economy is now 10.6% below its level in the fourth quarter of 2019, notes Payne.
The contraction occurred as the coronavirus pandemic was running rampant across the country.
"The latest jobless claims data show that the resurgence in Covid-19 cases is taking a toll on the recovery in the labor market", Oxford Economics lead USA economist Nancy Vanden Houten said in an analysis. The unemployment rate was 11.1% in June and is likely to remain in double digits through the fall.More news: Ellen DeGeneres on 'toxic' workplace allegations: 'I am sorry'
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: how much the economy shrank from the first quarter to the second quarter, which came in at -9.5% - still, the worst on record by that measure.
"But odds are the second-half recovery will be slower than initially expected, making up for less than half of the second-quarter drop". The data also showed drops in consumer investment on single-family housing and transportation equipment, and a drop in business inventory investment from retail companies such as motor vehicle dealers.
"This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending".More news: Wisconsin Republicans break with Trump on election delay