US GDP plunges 32.9 percent year-on-year in Q2

US GDP plunges 32.9 percent year-on-year in Q2

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The US’s gross domestic product for the second quarter plunged 32.9 percent on an annualized basis, according to a preliminary report from the US Department of Commerce Thursday. The quarter-on-quarter drop from Q1 is estimated at 9.5 percent, and the declines are entirely attributed to state-wide shutdowns in April and May.

Consumer spending, which normally accounts for about two-thirds of the US economy, contracted by a record 34.6 percent year-on-year in Q2. The decline was especially sharp in services, which dropped 43.5 year-on-year.

On the business side, outlays on infrastructure such as oil rigs dropped 35 percent while spending on equipment dropped by 37.7, both noted as record declines. The level of inventories also shrank by a $234.6 billion annual rate in Q2.

By comparison, the worst quarter during the financial crisis of 2008 was the 8.4 percent GDP drop in Q4. The previous record low was a 10 percent plunge in the first quarter of 1958, while the worst in recorded history—predating Department of Commerce records—was in Q2 of 1921.

Also Thursday, the US government reported that new claims for unemployment benefits totaled 1.434 million last week, the 19th straight week in which initial claims totaled at least 1 million and the second consecutive week in which initial claims rose after declining for 15 straight weeks.

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