Having endured what was surely a record-shattering slump last quarter, the USA economy faces a dim outlook as a resurgent coronavirus intensifies doubts about the likelihood of any sustained recovery the rest of the year. The country's GDP plunged 13.8% compared to the first quarter. It was the third consecutive quarter of contraction in France's worsening recession.
The first of estimate by INE is broadly in line with the forecast by the Bank of Spain which had seen a contraction in the economy of between 16 and 22 percent for the period between April to June at the height of the lockdown when all non-essential activities were halted. The previous worst quarterly contraction - 10 percent drop - occurred in 1958 during the Eisenhower administration.
"It therefore doesn't tell us all that much about the general state of the economy, which is usually why one would look at GDP figures in the first place". "We expect it will take years for that damage to be fully recovered", said Andrew Hunter, senior U.S. economist at Capital Economics.More news: Queensland is Closing Its Borders to People From Greater Sydney
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 - was recorded in 1950, when the USA economy shrank 10 percent in the first quarter.
"The hard part of this recovery is set to start about now", Colijn said.
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.More news: COVID-19: India moving to Unlock 3
"We have to consolidate the recovery and for that, it is essential to contain the new outbreaks", she said. The UK Government is already imposing quarantine on arrivals from Spain but more European countries could follow as cases spike. For the broader 27-country European Union, not all of whose members use the euro, output sagged 11.9%.
"The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending".
As tens of millions of Americans lost their jobs, the Federal Reserve stepped up with trillions of dollars worth of support to keep credit flowing to businesses and households, while Congress splashed out some $3 trillion in virus relief aid spending.More news: Victoria imposes new coronavirus restrictions as coronavirus infections rise by 671
Unemployment hit 15.3 percent by the end of June and is expected to reach 19 percent by the year's end, the government says, although the International Monetary Fund sees it rising to as much as 20.8 percent.