The U.S. economy contracted by a staggering and record-high rate in Q2 of 2020. The culprit? COVID-19.
According to new data from the Commerce Department, the gross domestic product (GDP) fell by a 33 percent annual rate from April thru June. (Quarterly GDP numbers are expressed as an annualized rate and measure how much the economy would shrink or grow if conditions persisted for 12 months). Not annualized, the GDP fell by 9.5 percent.
By either measure, we have not seen such a steep decline in the more than 70 years that this data has been tracked.
This spring the coronavirus ravished our nation. Lawmakers imposed lockdowns, shelter-in-place orders, and substantial restrictions on mobility and economic activity to prevent our healthcare system from being overwhelmed by cases.
By the end of Q2, states began to ease those restrictions, but the damage was done. In April, more than 20 million American jobs were wiped out. Initial unemployment claims started to fall in mid-May and had been on an encouraging downward trend each week until last week when the measure increased by over 850,000 to 17 million.
New data yesterday, finds that initial jobless claims rose for the second straight week to 1.43 million last week. Although millions of jobs have returned, we are still down nearly 15 million jobs since February.
Unfortunately, as coronavirus cases have spiked in recent weeks and continue to rise in some areas, there is concern that reimposing lockdowns and limitations portend a tough outlook for Q3.
Consumer confidence took a nosedive from a 20-year high in February. Although it has recovered from its pandemic lows, Americans’ confidence in the economy is still far from where it had been pre-COVID 19.
This data represents more than numbers on a screen, they demonstrate real, tangible hardship for millions of Americans struggling to find work, pay bills, keep their businesses afloat, and keep a roof over their heads.
Nadia Montoya, a California pastry chef, who lost her job in late March because of the pandemic, now works part-time at an organic supermarket and supplements her income by making cakes and desserts for friends and neighbors.
Things that were relatively normal for us—going on vacation, camping, going out to eat with the kids—all that changed since we can’t do that anymore, because they are closed and we don’t have the money. It is really hard at the moment.
Texas karaoke club owner Mick Larkin dumped $1,000 worth of perishable goods and protective equipment that he bought the same day in anticipation of a weekend rush when his state shut down bars again. He and his partner decided to close their doors for good.
We did everything we were supposed to do. When he shut us down again, and after I put out all that money to meet their rules, I just said, ‘I can’t keep doing this.’
Unfortunately, job losses, business closures, high unemployment, and uncertainty are our new normal.