The U.S. economy recorded its steepest contraction on record in the second quarter, with Gross Domestic Product (GDP) falling at a 32.9% annualized rate.
American GDP suffered its deepest decline in output since the government started keeping records in 1947, the Commerce Department said on Thursday. The drop in GDP was more than triple the previous all-time decline of 10% recorded in the second quarter of 1958. The economy contracted at a 5% pace in the first quarter.
Economists had forecast GDP to plunge 34.1% in the April-June quarter. The bulk of the historic GDP collapse occurred in April, when activity ground to an abrupt halt after restaurants, bars and factories were shuttered to slow the spread of COVID-19.
Consumer and business spending in the U.S. remain tentative as a recovery is under threat from a resurgence in new cases of COVID-19.
Though U.S. activity picked up in May, momentum has slowed amid a resurgence in new cases of the disease, especially in the densely populated South and West regions where authorities are closing businesses again or pausing re-openings.
Federal Reserve Chairman Jerome Powell on Wednesday acknowledged the slowdown in economic activity and announced that the U.S. central bank is keeping interest rates near zero and will continue pumping money into the struggling economy.