GDP Drops 32.9% in Q2, According to Estimate

Washington, DC, July 30, 2020–Real gross domestic product (GDP) decreased at an annual rate of 32.9% in the second quarter of 2020, according to the advance estimate released by the Bureau of Economic Analysis. 

In the first quarter, real GDP decreased 5%. The overall economy was down 9.5% in the second quarter compared to the same time last year. 

Personal savings were up in the second quarter to $4.69 trillion, compared with $1.59 trillion in the first quarter. 

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, according to a news release. 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 COVID-19 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. 

The GDP estimate is based on source data that are incomplete or subject to further revision by the source agency. The second estimate for the second quarter, based on more complete data, will be released on August 27.

The decrease in real GDP reflected decreases in personal consumption expenditures, exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

Economists expect the economy to resume growth in the third quarter, according to the Wall Street Journal.