Economists were bracing for an awful report card Thursday in regard to the pandemic, and it was indeed awful. The US economy shrank by an unprecedented 33% annual rate in the April-to-June quarter, reports the Wall Street Journal. It is by far the worst figure for gross domestic product since such records began in 1947, notes the AP, with the previous high being a 10% fall in 1958. By the reckoning of CNBC, economic activity in America hasn't plunged this much in a quarter since 1921. As bad as the GDP number is, however, it's not as high as the prediction of 35% by economists surveyed by Dow Jones.
It “just highlights how deep and dark the hole is that the economy cratered into in Q2,” says Mark Zandi of Moody’s Analytics. “It’s a very deep and dark hole, and we’re coming out of it, but it's going to take a long time to get out.” The GDP is expected to show a strong resurgence in the third quarter, perhaps by an annual rate of 17% or so, though rising coronavirus cases and lockdowns are putting a new damper on expectations. “The key caveat is that it will be a lot less better than we were expecting a few months ago,” Ian Shepherdson of Pantheon Macroeconomics tells the Journal. (Read more GDP stories.)