Knowing it was coming did little to prevent raised eyebrows down today, as the Commerce Department released its preliminary report showing real gross domestic product decreased at a record annual rate of 32.9 percent in the second quarter of 2020.
That plunge came on the heels of a first-quarter decline of 5.0 percent, which captured just the first two weeks of the economic constriction caused by the COVID-19 pandemic.
The decline in second quarter GDP showed the impact of shelter-in-place orders issued by state and local governments attempting to slow the spread of the virus that causes COVID-19. The most strident of those restrictions came in March and April, before states began to clear the way for businesses to reopen in May and June.
At the same time, federal and state assistance payments assistance payments began to reach laid-off workers, households and businesses. That, the department said, led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending.
The preliminary data will be updated by Aug. 27.
The decrease in real GDP reflected decreases in personal consumption expenditures, exports, private inventory investment, non-residential and residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending.
The drop in personal consumption reflected decreases in services, led by health care, and goods, led by clothing and footwear. Current‑dollar GDP decreased 34.3 percent, or $2.15 trillion, in the second quarter, to a level of $19.41 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion (table 1 and table 3).