U.S. GDP contracted a record 32.9% in the second quarter from a year ago, the Commerce Department said on Thursday, while a separate report showed jobless claims rising for the second consecutive week as the COVID-19 pandemic spins out of control.
The economic contraction caused by the pandemic was four times worse than the most devastating quarter of the financial crisis when annualized GDP fell 8.4% in 2008’s final three months.
Jobless claims rose to 1.43 million for the week ended July 25 from 1.42 million, the Labor Department said Thursday in a report. Continuing claims measuring the number of people receiving unemployment benefits rose to 17 million from 16.2 million for the week ended July 18, the first increase since May, the report said.
Federal Reserve Chairman Jerome Powell said on Wednesday the path forward for a U.S. recovery depends on how well the COVID-19 pandemic is contained. Infections began surging after states began reopening in May.
“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check,” Powell told reporters on Wednesday.
The U.S. broke the 150,000 threshold for deaths from COVID-19 on Wednesday, as measured by Johns Hopkins University. The U.S. has about 4.2% of the world’s population and has recorded 23% of COVID-19 fatalities.
“After declining gradually from a peak near the end of April, the number of COVID-19 cases has increased sharply in many parts of the country since mid-June,” Powell said. “We have thus entered a new phase in containing the virus, which is essential to protect both our health and our economy.”
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