Coronavirus leads to record drop in German GDP

Cornelia Mascio
Agosto 2, 2020

"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 can not be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and can not be separately identified".

The coronavirus pandemic sent the US economy plunging by a record-shattering 32.9% annual rate last quarter and is still inflicting damage across the country, squeezing already struggling businesses and forcing a wave of layoffs that shows no sign of abating.

U.S. Gross Domestic Product (GDP), percent change from the preceding quarter, seasonally-adjusted, annualized.

MADRID, July 31 ― Spain recorded a historic fall in GDP in the second quarter of the year, with the 18.5 per cent drop wiping out all the post-financial crisis recovery of the last six years, data from National Statistics Institute showed today. The previous worst quarterly contraction - 10 percent drop - occurred in 1958 during the Eisenhower administration.

That's because the virus has taken square aim at the engine of the American economy - consumer spending, which accounts for about 70% of activity.

"The latest jobless claims data show that the resurgence in Covid-19 cases is taking a toll on the recovery in the labor market", Oxford Economics lead United States economist Nancy Vanden Houten said in an analysis. Spending by consumers collapsed at a 34.6 percent annual rate as travel ceased and shutdown orders forced many restaurants, bars, entertainment venues and other retail establishments to close. Yet with the rate of confirmed coronavirus cases having surged in a majority of the states, more businesses being forced to pull back on reopenings, and the Republican Senate proposing to scale back government aid to the unemployed, the economy could worsen in the months ahead.

The job market, the most important pillar of the economy, has been severely damaged. Tens of millions of jobs vanished in the recession.

The pandemic also destroyed more than a million jobs in Spain in the second quarter, mostly in the services and tourism sector.

The first of estimate by INE is broadly in line with the forecast by the Bank of Spain which had seen a contraction in the economy of between 16 and 22 percent for the period between April to June at the height of the lockdown when all non-essential activities were halted. The Fed chairman warned that the viral epidemic has been endangering a modest economic recovery and that as a result, the Fed plans to keep interest rates pinned near zero well into the future. Before March, the number of people seeking unemployment checks had never exceeded 700,000 in any one week.

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