US GDP Contraction Revised Lower for 2nd Time

The US economy shrank by an annualized 31.4 percent in the second quarter of 2020, slightly lower than a 31.7 percent plunge in the second estimate and a 32.9 percent fall in the advance one. It reflects mainly an upward revision to personal consumption expenditures (PCE) that was partly offset by downward revisions to exports and to nonresidential fixed investment. Still, it remains the biggest contraction ever, pushing the economy into a recession as the coronavirus pandemic forced many businesses including restaurants, cafes, stores and factories to close and people to stay at home, hurting consumer and business spending.
BEA | Joana Taborda | joana.taborda@tradingeconomics.com
9/30/2020 2:44:36 PM
Consumer spending, which accounts for more than two-thirds of US economic activity, tumbled 33.2 percent, below 34.1 percent in the second estimate. Demand plummeted for services (-41.8 percent vs -43.1 percent in the second estimate), durable goods (-1.7 percent vs -1.3 percent in the second estimate), and nondurables (-15 percent vs -14.9 percent).

Business investment plunged 27.2 percent (vs -26 percent in the second estimate), due to decreases in equipment (-35.9 percent, the same as in the second estimate), structures (-33.6 vs -33.4 percent) and intellectual property products (-11.4 percent vs -7.7 percent). Residential spending also declined (-35.6 percent vs -37.9 percent).

Inventories dragged the GDP down by 3.5 percentage points (-3.46 percentage points in the advance estimate).

Exports sank 64.4 percent (vs -63.2 percent), the most on record. Services exports slumped 59.6 percent (vs -56.9 percent in the second estimate). In addition, goods sales dropped for a second consecutive period, down 66.8 percent (vs -66.3 percent). Meanwhile, imports tumbled 54.1 percent (vs -54 percent in the second estimate) due to a 69.9 percent plunge in services imports (vs -69.7 percent) and a 49.6 decline in goods purchases (vs -49.5 percent).

Federal government spending jumped 16.4 percent (vs 17.6 percent in the second estimate).

US GDP Contraction Revised Lower for 2nd Time



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