Germanys Covid-induced Q2 GDP plunge wiped off 10 years of growth
Jul 31 2020
Gross domestic product from April to June plunged 32.9%, according to the Department's first reading on the data.
While a recovery appeared to begin in May when the country recorded the largest month-to-month jobs increase ever, the positive numbers were unable to offset the historic decline the US economy experienced at the start of the pandemic.
Between the lines: The staggering contraction beats the last record set in 1958, when GDP shrank at an annualized 10% rate.
Compared to the same quarter of 2019, economic activity fell 9.5 percent. Individuals increased consumption of recreational goods & vehicles and housing & utilities, but lessened consumption of gasoline & other energy goods, health care, transportation services, recreational services, and food services & accommodation.
On an annual basis, its economy contracted 11.7% despite reopening businesses that followed coronavirus-induced restrictions in the first quarter.
The data show trade also took a huge hit, with exports falling just over 64 percent, and imports down 53.4 percent.
The drop in GDP figures came as a combination of sharp declines in personal consumption, spending and investments, with the personal consumption expenditures price index dropping to 1.9% in Q2. Exports and imports were both down more than 20% from a year ago, while consumer spending - the main driver of the U.S. economy - fell 10.7% year-on-year. "Americans are not behaving well in terms of social distancing, the infection rate is unacceptably high and that means economic growth can not gain any traction".
As well, businesses in cities across the US found themselves under siege as protests turned into riots and looting.
However, the jobless rate for July held steady at 6.4%, unchanged from June in a sign that the initial effects of the pandemic were easing. Although roughly in line with expectations, it was the second week in a row of increased unemployment filings. Current-dollar personal income rose more than six-fold to $1.39 trillion, while disposable personal income shot up 42.1% to $1.53 trillion.
Reduced spending on services such as healthcare drove the fall.
But Germany has been less affected by the virus than other European countries and second-quarter output data due on Friday could reveal much deeper downturns in other parts of the continent.
Experts are confident that a recovery process will begin in the third quarter.