A grim picture emerged Thursday of a U.S. economy that endured a record-shattering plunge last quarter and is now struggling to rebound as the coronavirus keeps forcing more layoffs.
The economy shrank at a dizzying 32.9% annual rate in the April-June quarter, when the viral outbreak shut down businesses, throwing tens of millions out of work and sending unemployment surging to nearly 15%. The government’s estimate of the second-quarter fall in the gross domestic product was the sharpest such drop on records dating to 1947. The previous worst quarterly contraction, a 10% drop, occurred in 1958 during the Eisenhower administration.
Soon after the government issued the bleak economic data, President Donald Trump diverted attention by suggesting a “delay” in the Nov. 3 presidential election, based on his unsubstantiated allegations that widespread mail-in voting will result in fraud. The dates of presidential elections are enshrined in federal law and would require an act of Congress to change.
So steep was the economic fall last quarter that most analysts expect the economy to produce a sharp bounce-back in the current July-September period. Yet with the rate of confirmed coronavirus cases having surged in a majority of states, more businesses being forced to pull back on re-openings and the Republican Senate proposing to scale back government aid to the unemployed, the economy could worsen in the months ahead.
In a sign of how weakened the job market remains, more than 1.4 million laid-off Americans applied for unemployment benefits last week. It was the 19th straight week that more than 1 million people have applied for jobless aid. Before the coronavirus erupted in March, the number of Americans seeking unemployment checks had never exceeded 700,000 in any one week, even during the Great Recession.
An additional 830,000 million people applied for unemployment benefits under a new program that extends eligibility for the first time to self-employed and gig workers. All told, the government says roughly 30 million people are receiving some form of jobless aid, though that figure might be inflated by double-counting by some states.
The pain could soon intensify: A supplemental $600 in weekly federal unemployment benefits is expiring, and Congress is squabbling about extending the aid, which will probably be done at some reduced level of payment.
Last quarter’s economic drop followed a 5% fall in the January-March quarter, during which the economy officially entered a recession triggered by the virus, ending an 11-year economic expansion, the longest on record in the United States.