- US gross domestic product (GDP) fell at a record 33% annualized rate in the second quarter, meaning the coronavirus pandemic has officially led to the worst GDP slump on record.
- Morgan Stanley predicts back-to-back records, with the third quarter likely to show the largest sequential GDP increase in American history – but it won’t back all the way.
- Bank of America also found economic activity spiking again as lockdowns lifted in May and June, and a slight jobs comeback even continuing into July.
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The coronavirus pandemic led to the largest GDP plunge in American history, the Commerce Department said on Thursday, citing preliminary data.
US gross domestic product fell at a record 33% annualized rate in the second quarter, meaning the economy was about 10% smaller after those three months than at the start of the year.
Morgan Stanley researchers predict that one record will be immediately followed by another, saying in a research note that third-quarter GDP is poised to show the largest sequential increase on record.
The second quarter’s drastic drop-off can be attributed to months of pandemic-related shutdowns. March and April saw mass layoffs and completely decimated economic activity. But as lockdowns lifted in May and June – even as coronavirus cases continue to surge – economic activity spiked again.
A note from Bank of America said July should continue to see jobs growth, predicting about 1 million jobs will be added on net after June’s record 4.8 million increase. Real-time data sources from the Bureau of Labor Statistics and Google mobility trends indicate slowing momentum due to the emergence of new virus hotspots, the bank said.
Bank of America also cautioned there was a “large error band around this forecast” and said it sees the unemployment rate heading from about 11.1% as of end-June to to 10.7%.