U.S. economy likely contracted at its steepest pace since the Great Depression in second quarter as the COVID-19 pandemic destroyed consumer and business spending
FILE PHOTO: A shopkeeper works inside his retail store as the phase one reopening of New York City continues during the outbreak of the coronavirus disease in the Brooklyn borough of New York City, New York, U.S. June 9, 2020. REUTERS/Shannon Stapleton
Federal Reserve Chair Jerome Powell on Wednesday acknowledged the slowdown in activity. The U.S. central bank kept interest rates near zero and pledged to continue pumping money into the economy. The drop in GDP would be more than triple the previous all-time decline of 10% in the second quarter of 1958. On a non-annualized basis, GDP likely tumbled 10.6%. The economy contracted 5% in the first quarter.
The plunge in GDP and faltering recovery could put pressure on the White House and Congress to agree on a second stimulus package. President Donald Trump, whose opinion poll numbers have tanked as he struggles to manage the pandemic, economic crisis and protests over racial injustice three months before the Nov. 3 election, said on Wednesday he was in no hurry.Economists say without the historic fiscal package of nearly $3 trillion, the economic contraction would have been deeper.
Consumer spending, which accounts for more than two-third of the U.S. economy, is expected to have contracted at the same margin as GDP in the second quarter. Major retailers, including JC Penney and Neiman Marcus, have filed for bankruptcy.
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