Gross Domestic Product jumped by an annualized rate of 33.1%, above expectations. That included a surge of 40.7% in personal consumption, a core component of the economy. Business spending is up over 23% after crashing 27%. The impressive statistics come after the crash.
The United States' Real Gross Domestic Product (GDP) contracted at an annual rate of 31.7% in the second quarter, the US Bureau of Economic Analysis' second estimate showed on Thursday. This reading came in better than the advance estimate of 32.9% and the market expectation of 32.5%.
Better than expected – the green on the screen masks a devastating drop of 32.9% annualized in US Gross Domestic Product in the second quarter, the worst in history. Expectations stood at -34.1%, so that counts as a beat. Nevertheless, the statistics reflect significant suffering – a crash of 27% in business investment, a collapse of 64.1% in exports, more halving of imports, 53.1%, and a collapse of personal consumption by 34.6%.
Normality disappeared quickly in the US as activity contracted for the first time five years under the mandatory closure of much of the economy in the Coronavirus fight. Even though growth in the first two months of the quarter had been estimated at 2.7% the precipitous collapse of the labor market in the second half of the month and the shuttering of many businesses drained an enormous amount of production and consumption from the economy.
The hard data is out – and it is heartbreaking, especially as it is only the beginning. The US economy squeezed by 4.8% annualized. Officials admit the data is incomplete, it was released later than expected, and one data provider erroneously published a positive figure. Yet as the dust is settling, the data is still devastating – the worst contraction since the financial crisis and at -4.8% annualized, it is worse than 4% expected.
