The U.S. economy shrank at an annualized 32.9% rate in the second quarter — the worst-ever contraction on records that date back to 1947, the government said on Thursday.
Why it matters: Widespread lockdowns to contain the spread of the coronavirus pandemic ravaged the economy in a way that's never been seen in modern times, and hope for a swift recovery has been dashed as cases have surged nationwide.
Between the lines: The staggering contraction beats the last record set in 1958, when GDP shrank at an annualized 10% rate.
The big picture: The GDP report puts a number on the unprecedented damage we saw playing out in real-time from April to June: millions of jobs lost, tens of thousands of shuttered businesses and a record halt in activity.
- "As horrific as the GDP number is, it's basically reporting something that we all already knew — that economic activity came to a screeching halt as the virus altered the contours of our lives. Millions lost their jobs, and the real issue is how our economy recovers," economist Justin Wolfers tweeted.
- More recent data shows a renewed economic slowdown alongside worsening outbreaks across the country.
Worth noting: U.S. government data always "annualizes" the quarterly GDP figures — meaning the number assumes the pace the economy grew or shrunk last quarter will continue over the year.
- Because the economy experienced a swift, marked deterioration in the second quarter that's unlikely to be repeated, economists are also looking at another figure: how much the economy shrank from the first quarter to the second quarter, which came in at -9.5% — still, the worst on record by that measure.
The bottom line: Any way you slice it, it's an ugly, historic economic contraction.