We knew this was coming, but the Commerce Department made it official this morning.
The gross domestic product (GDP) of the United States contracted at a record, annualized pace of 32.9 percent during the second quarter of the year or more than anyone reading this has seen in their lifetime.
The annualized rate reflects a 9.5 percent contraction during the quarter.
"We've never done this before. We've never shut down the economy before for crises," Laura Veldkamp, a professor of finance and economics at Columbia Business School told ABC News. "They've always unfolded quite a bit more gradually than this. Even the financial crisis, it felt very sudden, but we didn't suddenly tell everybody, 'Hey, it's, it's not safe to do in person transactions.'" [...]
"It was an epically bad second quarter and we got our first look at just how bad -- down 32.9 percent on an annualized basis, the worst 3-month U.S. economic contraction ever recorded," Greg McBride, the chief financial analyst at Bankrate, said in a commentary Thursday morning. "The economy continues to set records for all the wrong reasons."
In closely related news, the Labor Department also reported this morning that over 1.4 million Americans filed new, initial claims for unemployment last week.
That means jobless claimed have now increased two weeks in a row and, if you include gig-economy workers covered only by the soon-to-expire pandemic unemployment program, the number climbed by over 2.2 million.
Initial jobless claims rose by 12,000 to 1.434 million in the week ended July 25, the Labor Department said Thursday. Economists surveyed by MarketWatch had been looking for 1.51 million new claims. A new federal relief program for so-called “gig” workers like Uber drivers, totaled 829,607 last week.
The number of people already collecting economic benefits, known as continuing claims rose by 867,000 to 17.06 million. These claims are reported with a one-week lag. This is a sign that workers are staying longer on unemployment rolls and rehiring has slowed. It is the first increase in continuing claims since late May.
As bad as things have been, economically speaking, they could have been worse and could still become worse because congressional Republicans are about to push us over a cliff.
The numbers reported above are what happened even with the support of trillions of dollars in stimulus spending, but the bulk of that spending is about to fade or sunset. The pandemic unemployment program will formally expire tomorrow and Republicans are committed to either cutting the program or killing it. The GOP is refusing to help state and local governments and it appears the money they're offering to school systems will be less than what's necessary.
Some Senate Republicans are trying to pass a narrow extension of the pandemic unemployment program to prevent it from expiring tomorrow, but they're trying to extend it with funding for $200 per week in benefits, down from $600. That alone would take a massive bite out of the economy and increase unemployment, not decrease it.
A global pandemic would have harmed our economy regardless of who is in power, but things are worse than they had to be because of Trump and the Republican party. They don't believe in science or even sound economic theory. Sometimes I think we under appreciate the fact that one of our two major parties governs based on economic philosophy that is completely unsupported by math or lived experience.
We can look at the recent experience of most other countries on the planet and observe that we did a much worse job of handling the coronavirus under Trump. We haven't really handled it at all.
Although the pandemic unemployment program will formally expire tomorrow, the reality is the last checks already went out. It's effectively over.