Commerce Department reported that the gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago. The new report, the government’s last look at the second quarter, showed a decline that was more than three times larger than the previous record-holder, a fall of 10% in the first quarter of 1958 when Dwight Eisenhower was president. Economists believe the economy will expand at an annual rate of 30% in the current quarter as businesses have re-opened and millions of people have gone back to work. That would shatter the old record for a quarterly GDP increase.
Economists are forecasting that growth will slow significantly in the final three months of this year to a rate of around 4% and could actually topple back into a recession if Congress fails to pass another stimulus measure or if there is a resurgence of Covid-19. There are upticks in infections occurring right now in some regions of the country, including New York. The economy fell at a 5% rate in the first quarter, signaling an end to a nearly 11-year-long economic expansion, the longest in U.S. history. That drop was followed by the second-quarter decline of 31.4%, which was initially estimated two months ago as a drop of 32.9%, and then revised to 31.7% last month. The slight upward revision in this report reflected less of a plunge in consumer spending than had been estimated. It was still a record fall at a rate of 33.2%, but last month’s projections were for a decline of 34.1%. This improvement was offset somewhat by downward revisions to exports and to business investment.