The state of the world’s largest economy is far from being ideal. Based on the information provided by the Bureau of Economic Analysis, the U.S. economy contracted at a 32.9% annual rate in the second quarter. Unfortunately, the coronavirus pandemic had a tremendous impact on the local economy.
As a result, the U.S. plunged into its first recession in 11 years. The pandemic terminated the longest economic expansion in the country’s history. Moreover, it erased five years of economic gains in a couple of months. Importantly, in the first quarter, gross domestic product (GDP) fell by an annualized rate of 5%.
People should take into account that the current recession is no ordinary one. Notably, the combination of public health and economic crises created an unprecedented situation. Moreover, numbers can’t fully convey the severity of the problem. Unfortunately, millions of Americans are struggling to meet ends meet.
Several months ago, more than 20 million American jobs vanished as businesses closed and most of the country was under stay-at-home orders. Importantly, this was the biggest drop in jobs in history. The record-keeping began more than 80 years ago. Moreover, claims for unemployment benefits jumped and it is hard to say how long it will take to return to pre-pandemic levels.
The worst quarter for the U.S. economy
The coronavirus pandemic created huge pressure on the economy. Notably, the second-quarter GDP was nearly four times worse than during the peak of the financial crisis. For example, during the fourth quarter of 2008, the economy contracted at an annual rate of 8.4%.
It is worth mentioning that the annualized rate measures how much the economy would grow or shrink if current conditions were to persist for 12 months. Moreover, the not annualized GDP fell by 9.5% between April and June, or by $1.8 trillion.
Washington deployed trillions of dollars in monetary and fiscal stimulus to support the country. For instance, loan programs for companies expanded unemployment benefits and checks sent directly to many Americans.
The Federal Reserve made the decision to extend its various lending programs through to the end of the year to help businesses and markets function.
The coronavirus pandemic changed plans for millions of people around the country. Many people from New York to Los Angeles lost their jobs. Authorities should work with private organizations to boost the economy. Otherwise, it will be harder to solve all the problems created by the coronavirus pandemic. Moreover, tensions between the U.S. and China, as well as other countries, have the potential to affect the U.S. economy. Consequently, the U.S. and China should take into consideration the current state of affairs.