U.S. GDP Suffers Worst Recorded Drop In American History

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The United States GDP suffered the worst recorded drop in American history in Q2 2020, an annualized rate of nearly 33 percent.

According to the Bureau of Economic Analysis, GDP “decreased at an annual rate of 32.9 percent in the second quarter of 2020.” The BEA calculates changes in GDP based on what would happen if the same growth or decrease happened for an entire year.

“In the first quarter, real GDP decreased 5.0 percent,” the BEA declared, noting, however, that the Q2 “estimate” is “based on source data that are incomplete or subject to further revision by the source agency.”

“The ‘second’ estimate for the second quarter, based on more complete data, will be released on August 27, 2020,” it announced.

The BEA explained that the “decline in second quarter GDP reflected the response to COVID-19, as ‘stay-at-home’ orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses.”

“This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending,” it declared, adding, “The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.”

CNN Business reported that the Q2 drop “was nearly four times worse than during the peak of the financial crisis, when the economy contracted 8.4% in the fourth quarter of 2008,” though noted that the United States “only began keeping quarterly GDP records in 1947, so it’s difficult to compare the current downturn to the Great Depression.”

This post has been updated to clarify that the BEA calculates GDP using an annualized rate.