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Coronavirus: The US economy has been experiencing the strongest contractions in decades



New Yorkers in need receive free food, dry goods and meat at a food sale event for the Bank of New York at Lincoln Center on July 29, 2020 in New York City.

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Food banks have seen an increase in demand

The US economy contracted by 32.9% per annum for the quarter in April-June, when the country faced spending cuts during the pandemic.

It was the deepest fall since the government began accounting in 1

947, and three times stricter than the previous record of 10% set in 1958.

Reduced spending on services such as health care has led to a drop.

Economists said they expect a variety of declines in the second quarter and a recovery after that.

But as cases of the virus in the United States and in some areas again impose restrictions on activity, the rebound shows signs of delay.

Last week, more than 1.4 million people filed new unemployment claims, slightly more than the previous week for the second week in a row. Other data point to spending cuts and falling confidence in July.

Job losses

Jerome Powell, chairman of the Central Bank of America, on Wednesday warned of a resumption of the slowdown, describing the downturn as “the hardest in our lives.”

He called for additional government spending to help American households and businesses survive the crisis.

The call came from other business leaders on Thursday as figures drew attention to the scale of the country’s economic crisis.

“The terrible news of the historic second-quarter gross domestic product decline should shock us all,” said Neil Bradley, chief political director of the US Chamber of Commerce, a group of business lobbyists. “This rampant news should make Congress move fast.”

  • The Fed warns of the need to protect the US economy
  • The German economy is in sharp decline

The International Monetary Fund predicted that global growth would fall by 4.9% this year. On Thursday, Germany reported a record quarterly decline of 10.1%, and the Mexican economy also reported a double-digit decline.

Compared to the same quarter a year ago, the US economy shrank by 9.5%. Exports and imports fell 20% more than last year, while consumer spending, the main driver of the US economy, fell 10.7% year on year.

Empty pockets

The United States has lost nearly 15 million jobs since February, despite strong employment in May and June. According to the US Census, more than half of adults live in households that have seen declining incomes since the pandemic.

Economists have warned that the United States will take years to recover from the devastation.

“Even as the economy recovered sharply in May and June, the Covid-19 economic shock has done so much damage in recent months that the net result was an economic disaster for the second quarter,” wrote Josh Bevens, director of research at the Institute for Economic Policy.

“The fact that the initial claims of the unemployed rose during the second week is worrying and underscores that the resumption of consumption is under threat,” said Madhavi Bokil, vice president of Moody’s Investors.

At the Bean Post pub in New York, owner Anthony LoPorto said he continues to struggle to fill his tables and is worried about what autumn and winter will bring.

“I don’t believe in a quick rollback at all,” he said. “It’s just that people don’t have enough money, and people’s spirits aren’t enough.”


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