The United States Economy Just Suffered Its ‘Sharpest Quarterly Drop on Record’
United States Gross Domestic Product plunged 31.7 percent in the second quarter of 2020 under the crushing weight of the coronavirus pandemic, according to new data released by the US Bureau of Economic Analysis.
Although initial estimates had predicted a drop of 32.9 percent, “‘stay-at-home’ orders issued in March and April” that were “partially lifted in some areas of the country in May and June” led to upticks in private investment and consumer spending, the agency wrote on Thurday. Specifically, the $600 per week Pandemic Unemployment Assistance and Paycheck Protection Program that Congress included in the CARES Act helped keep the economy afloat.
The PUA, which Republicans refused to renew after it expired in July, “led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending,” the agency said. “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.”
This is because the economic consequences from the precipitous drops in income for unemployed Americans are not yet available.
The government’s analysis paints an even bleaker picture for the health of economy as a whole.
“Real gross domestic income (GDI) decreased 33.1 percent in the second quarter, compared with a decrease of 2.5 percent in the first quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 32.4 percent in the second quarter, compared with a decrease of 3.7 percent in the first quarter,” the BEA wrote. “Current-dollar GDP decreased 33.3 percent, or $2.07 trillion, in the second quarter to a level of $19.49 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion.”
“It was the sharpest quarterly drop on record,” the Associated Press noted.
American financial institutions, on the other hand, saw their profits soar “$39.5 billion in the second quarter, in contrast to a decrease of $42.2 billion in the first quarter” of 2020, the data show.
Put another way, the richest American financial gentry are seeing a near-cosmic inflation of their fortunes, while the rest of the population scrambles for crumbs.
Last Monday, for example, the Bloomberg Billionaires Index found that Tesla CEO Elon Musk’s astronomical net worth jumped $7,780,000,000 to mindnumbing $8,840,000,000. Yes, that is an almost $8,000,000,000 increase within a 24-hour period, thanks to an 11 percent jump in Tesla’s stock values. But this explosion of wealth is only a fraction of the amount of money Musk has raked in this year. How much has he gained so far? $57,200,000,000.
President Donald Trump, meanwhile, has seen a $300,000,000 drop in his net worth in 2020, which Bloomberg estimates hovered around $3,000,000,000 at the end of 2019. No one really knows for sure what Trump’s net worth really is.
“Declines in the value of the president’s office building at 40 Wall Street, his iconic Trump Tower on Fifth Avenue and properties owned jointly with Vornado Realty Trust accounted for some of the biggest hits to his net worth,” said Bloomberg.