US Economy Shrank 9.5% in Second Quarter, -32.9% on Annual Basis

US real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent. The US economy shrank 9.5% in the second quarter.

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.

Current‑dollar GDP decreased 34.3 percent, or $2.15 trillion, in the second quarter to a level of $19.41 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion.

Current-dollar personal income increased $1.39 trillion in the second quarter, compared with an increase of $193.4 billion in the first quarter. The increase in personal income was more than accounted for by an increase in personal current transfer receipts (notably, government social benefits) that was partly offset by declines in compensation and proprietors’ income. Additional information on several factors impacting personal income can be found in “Effects of Selected Federal Pandemic Response Programs on Personal Income.”

Disposable personal income increased $1.53 trillion, or 42.1 percent, in the second quarter, compared with an increase of $157.8 billion, or 3.9 percent, in the first quarter. Real disposable personal income increased 44.9 percent, compared with an increase of 2.6 percent.

Personal outlays decreased $1.57 trillion, after decreasing $232.5 billion. The decrease in outlays was led by a decrease in PCE for services.

Personal saving was $4.69 trillion in the second quarter, compared with $1.59 trillion in the first quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 25.7 percent in the second quarter, compared with 9.5 percent in the first quarter.

The June, 2020 US unemployment rate is 11.1%.

Germany GDP fell 10.1% in the second quarter. Germany’s jobless rate for July held steady at 6.4%, unchanged from June in a sign that the initial effects of the pandemic were easing.

In the euro area, gross domestic product is forecast to shrink by 8.7% this year and to increase by 6.1% in 2021. For the EU as a whole, the economy is forecast to contract by 8.3% in 2020 and grow by 5.8% in 2021. The contraction in 2020 is thus set to be around one percentage point worse than projected in the Spring Forecast. Overall, real global GDP (excluding the EU) is forecast to contract by around 4% in 2020 before a recovery of 5% in 2021. This implies that by the end of next year, global GDP would recover above the 2019 level, but remain substantially below the pre-pandemic global growth trajectory.

The global forecasts could massively change depending on what happens with COVID-19. There could be second or third waves of the disease or vaccination success.

China reported a positive 3.2% second quarter GDP.

SOURCES- Bureau of Economic Analysis, European Commission, DW, Reuters
Written By Brian Wang,

15 thoughts on “US Economy Shrank 9.5% in Second Quarter, -32.9% on Annual Basis”

  1. And all that’s required for your statement to be correct is the assumption that China is being honest about their GDP. Hahahahahahahahahahahanha…,.,.no wait, I can’t…..hahahahahahaha!

  2. I think a human live is worth a bit more. But lets use your $10M. At an estimated 3 million dead that’s $30T. Then there is the cost of dealing with the disease, people don’t get sick or die for free. Each death cost about $1M and each one sicken about $100K so with about 15 million hospitalized we get about $2.5T. And then the cost of the long term care for the 14 million that survive. That’s $50K a person per year for average of 4o years. That’s $700B a year, long term $28T.

    Killing people or letting them die unnecessarily is pretty expensive.

  3. It will shrink some more. It will continue to shrink until there is vaccine. The shrinkage won’t be as bad as this period.

  4. Do more lockdowns, blue states…just more, maybe nobody will notice that its your doing and Trump will not be re-elected, lol. This is insane.

  5. yeahhh two people I know / knew are dead now. See how practical it feels when it happens to you.

  6. K-12 changes – not sure that’s a reason to be sad. It’s not like US K-12 was widely praised for what a great job they were doing before.

    Being forced to try new things might actually be a good thing. If we just open all the schools and try to go back to old ways (plus masks and sanitizer and social distancing) my guess is the schools will do even worse than before, and maybe not even as good as they’d do if we were able to keep all the kids home.

    Opening schools is not really about doing the best we can for kids’ education – it’s about letting the parents get back to work.

  7. Doesn’t mean much in absolute terms, the Germans are still ahead of 2016/2017? 
    It wasn’t all misery for the locals at those levels back then.

    2009 wasn’t the end of the world and was relatively OK for the majority, just like this time and probably the next. Things could always be worse, you could be dead or crippled and miss out on all the fun next year or the next many decades.

  8. well with the Statistical Value of a Human Life now over $10M and 150k dead, we still got lots of economy to kill – no wait, that $1.5T, we already went past that… ok open it up.

  9. Reasons to be sad:

    Loss in employment income: Percentage
    of adults in households had a loss in income 51.1%.
    Expected Loss in Employment Income: Percentage of adults in
    household to have a loss in income in next 4 weeks is 35.2%.
    Food Scarcity: Percentage of adults in households where not enough
    to eat in the last 7 days is 12.1%.
    Delayed Medical Care: 40.1%
    of households report they delayed medical care over the last 4 weeks.
    Housing Insecurity:  26.5% of households reported they missed last
    month’s rent or mortgage payment.
    K-12 Educational Changes:  Essentially all households with children
    are reporting were not being taught in a normal format.

    Reasons to be optimistic:
    Airlines:  daily travel increased from 9 – 30% of
    average annual level in last 4 months.
    Restaurants:  volume increased from neg – 60% of average
    annual level in last 3 months.
    Movie Tickets:  nope. but soon.
    Hotel Occupancy:  volume increased from 22 – 50% of average
    annual level in last 3 months.
    Gasoline consumption:  volume increased from 45 – 90% of average
    annual level in last 3 months.
    Transit:  volume increased from 20 – 45% of average
    annual level in last 4 months.

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