GDP Plunged 32.9%: Here's Why It Matters

The Commerce Department's initial estimate of U.S. gross domestic product (GDP) in the second quarter was, in a word, historic. The value of all goods and services purchased last quarter plunged at a 32.9% annual rate. This followed a 5% contraction in the first quarter of 2020.

The BEA offered the following assessment of this decline in GDP:

“The decline in second quarter GDP reflected the response to COVID-19, as ‘stay-at-home’ orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.”