The U.S. Commerce Department reported Wednesday that the economy's total output of goods and services, or gross domestic product (GDP), fell at a 31.4% rate from April through June, only slightly changed from the 31.7% drop estimated last month.
Predicting the US economy will shrink for the first time this year since the Great Recession of 2007-2009, the U.S. government's report on the country's economic performance during the second quarter reveals the largest drop since the 10% fall in the first quarter of Dwight D. Eisenhower's administration of 1958, then the greatest economic decline in US history since the government began producing this data in 1947.
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While economists predict a drastic economic expansion of close to 30% for the third quarter (July-September) due to states reopening their economies in the summer months, the official data will not be released until October 29, five days before the U.S. presidential elections.
Although U.S. president Donald Trump hopes to use this economic rebound data to convince voters to elect him for a second term, economists forecast limited and perhaps even negative growth for the fourth quarter (October-December), given upticks in COVID-19 infections throughout the country and Congress' failure to pass another COVID-19 stimulus bill.
Estimating a more than 4% GDP reduction for all of 2020, many economists believe it could take a significant amount of time before the lost output is restored and warn of the GDP's continual shrinking if no further governmental support arrives.
Commerce Department predictions of a 32.9% drop two months ago, and of a 31.7% drop one month ago, ended up at 31.4% due to less of a plunge in consumer spending than expected and exports and business investment.
Gregory Daco, chief US economist at Oxford Economics, said: "With economic momentum cooling, fiscal stimulus expiring, flu season approaching, and election uncertainty rising, the main questions are how strong the labor market will be going into the fourth quarter. With the prospect of additional fiscal aid dwindling, consumers, businesses, and local governments will have to fend for themselves in the coming months."