US economy is experiencing the sharpest contraction

US economy is experiencing the sharpest contraction

The US economy shrank at an average rate of 32.9 percent between April and June as the nation grappled during the pandemic with lockdowns and budget cuts.

This was the largest fall since the government began record-keeping in 1947 and three times more extreme than the 10 percent previous record set in 1958.

Reduced spending on programs and health care sparked the slowdown.

Economists have said that they plan to see the sharpest fall in the second row, with stabilization afterwards.

US economy is trying to recover

But as cases of virus in the US are on the increase and some places are re-imposing operation limits, the turnaround is showing signs of delay.

Last week, more than 1.4 million people filed new unemployment claims, up slightly for the second week in a row from the previous week. Other data points to July cuts in spending and declines in morale.

Jerome Powell, the president of the Central Bank of America, warned of a revived recession on Wednesday. Describing the contraction as “the worst of our lives.”

He has urged additional government spending to help American households and businesses cope with the crisis.

The call was repeated on Thursday by other business executives. As the figures centered on the severity of the country’s economic crisis.

“The shocking news of the unprecedented downturn in the second quarter of the gross domestic product will surprise us all”. Neil Bradley, chief executive officer at the US Chamber of Commerce, a industry advocacy organization said. “This startling news needs to push Congress to act fast.”

The International Monetary Fund has forecast a 4.9 per cent drop in global demand this year. Germany recorded a quarterly record 10.1 per cent fall on Thursday, while Mexico ‘s economy also registered a double-digit downturn.

The US economy fell 9.5 per cent over the same period a year ago. Exports and imports dropped more than 20% year-on-year, while consumer spending – the US economy’s primary engine – plummeted 10.7% year-on-year.

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