The Commerce Department announces that GDP fell 9.5% in the second quarter just before aid for 17 million unemployed expired. The impact of the coronavirus pandemic this spring caused the largest contraction in the US economy on record. GDP fell 9.5% in the second quarter of the year compared to the previous three months, according to data released Thursday by the Commerce Department. In annualized rate, it represents a drop of 32.9%. This is an unprecedented economic collapse, both in size and speed.
Hardest Hit Month of 2020 was in April
The new figures show that the greatest damage occurred during April – the hardest days of the economy closing due to the pandemic – while in May and June some businesses began to open. Despite the open in recent weeks, employment has stalled and some losses are still to be seen while the threat of a second close is latent. “This is the worst data we have ever seen,” says Jared Bernstein, a specialist at the Center on Budget and Policy Priorities, a center that analyzes the impact of government budget policies. “Although there is a slight recovery, it still feels like a recession for many,” adds the expert.
Republicans and Democrats Can’t Agree on New Aid Package
The data, somewhat better than analysts expected, was discovered and analyzed just before the expiration of the supplementary unemployment benefits for the 17 million unemployed, a record figure that has been reached due to the lock downs and stay at home orders due to the coronavirus. The negotiation of a new aid package is paralyzed on Capitol Hill by disagreements between Republicans and Democrats. Congress has already injected billions of dollars to try to mitigate the economic impact on businesses and homes of a pandemic of which the United States has become the global epicenter.
Aid Program Approved in May 2020
In May, US lawmakers approved an aid program that provides $600M a week to the unemployed. Democrats insist that aid remains the same in the coming months and that the states also be supported through the program. However, Republicans have proposed a proposal with fewer public resources in which unemployment benefits are $ 200 (169 euros) per week and in which small businesses are supported, as well as companies through tax benefits . Given the drop in consumption, government aid has become a support for the economy to get going.
Labor Department Reports Record Unemployed Rates
The effects of the closure of the economy due to the advance of the coronavirus in the United States have begun to be reflected more clearly in other reports. At least 1.43 million people have registered with the Labor Department as unemployed in the last week. It has been 19 weeks since the data is less than a million, which indicates that despite the fact that several sectors of the economy have begun to open in recent weeks, some of them did not survive the closing. The fear that the pandemic continues to grow rapidly is latent. As of Thursday morning, 4.4 million cases have been registered and the death toll from Covid-19 has already reached 150,700, according to data from Johns Hopkins University.
Larger States Impacted the Most in 2020
The rapid pace of the pandemic has intensified in more populous states such as Florida, California and Texas. On Wednesday, the Federal Reserve (Fed) warned that the economic recovery in the United States is conditional on the advance of the virus in the country. Central bank executives fear that the increase in the numbers of infections and deaths will lead to an inevitable second shutdown of economic activity. The figures for this Thursday show the stoppage of various sectors in the months of April and May, which little by little have started their activities in the last month. Jerome Powell, president of the Fed, assured that a third of the jobs that have been lost during the pandemic have been recovered with the timid opening. And that sectors such as aviation and hotels have begun to see a slight reactivation that will boost the economy in the coming months.