US economy sees sharpest contraction in decades – Times of Oman

US economy sees sharpest contraction in decades – Times of Oman

Washington: The US economy saw the sharpest contraction in decades between April and June as the country grappled with the fallout of COVID-19 lockdowns, indicating the depth and severity of the pandemic-induced recession.

The US economy contracted at an annual rate of 32.9 per cent in the second quarter, the US Commerce Department reported on Thursday. It was the deepest decline since the government began keeping records in 1947.

In the first quarter of 2020, real GDP contracted at an annual rate of 5 per cent.

"Parsing through the data reveals broad-based weakness in most of the spending components, which comes as little surprise given that the economy was more or less shut down from mid-March through mid-May," Jay H. Bryson, chief economist at Wells Fargo Securities, wrote in an analysis.

The decrease in real gross domestic product (GDP) reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending, according to the "advance" estimate released by the Commerce Department's Bureau of Economic Analysis.

The PCE plunged at an annual rate of 34.6 per cent in the second quarter, generating a 25-percentage-point