The U.S. economy plunged at a record rate in the spring but is poised to swing to a record increase in the quarter that is just ending.

The Commerce Department reported Wednesday that the gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago.

The new report, the government’s last look at the second quarter, showed a decline that was more than three times larger than the previous record-holder, a fall of 10% in the first quarter of 1958 when Dwight Eisenhower was president.

Economists believe the economy will expand at an annual rate of 30% in the current quarter as businesses have re-opened and millions of people have gone back to work. That would shatter the old record for a quarterly GDP increase, a 16.7% surge in the first quarter of 1950 when Harry Truman was president.

The government will not release its July-September GDP report until Oct. 29, just five days before the presidential election.

While President Donald Trump is counting on an economic rebound to convince voters to give him a second term, economists said any such bounce back this year is a longshot.

Economists are forecasting that growth will slow significantly in the final three months of this year to a rate of around 4% and could actually topple back into a recession if Congress fails to pass another stimulus measure or if there is a resurgence of COVID-19. There are upticks in infections occurring right now in some regions of the country, including New York.

“There are a lot of potential pitfalls out there,” said Gus Faucher, chief economist at PNC Financial Services. “We are still dealing with a number of significant reductions because of the pandemic.”

He said in addition to the possibility that Congress will not pass further stimulus support because of the sharp split between Democrats and Republicans over how much more is needed, there are other threats in the form of uncertainty over the upcoming election.

“All this political uncertainty has the potential to weigh on economic growth,” Faucher said.

The Trump administration says that solid growth in coming quarters that will restore all of the output lost by the pandemic.

So far this year, the economy fell at a 5% rate in the first quarter, signaling an end to a nearly 11-year-long economic expansion, the longest in U.S. history. That drop was followed by the second quarter decline of 31.4%, which was initially estimated two months ago as a drop of 32.9%, and then revised to 31.7% last month.

The slight upward revision in this report reflected less of a plunge in consumer spending than had been estimated. It was still a record fall at a rate of 33.2%, but last month projections were for a decline of 34.1%. This improvement was offset somewhat by downward revisions to exports and to business investment.

Related Stories
‹
U.S. Economy Shrank 3.5% in 2020 After Growing 4% Last Quarter
Stuck in the grip of a viral pandemic, the U.S. economy grew at a 4% annual rate in the final three months of 2020 and shrank last year by the largest amount in 74 years. For 2020 as a whole, a year when the coronavirus inflicted the worst economic freeze since the end of World […]
U.S. Economy Grew at 33% Rate in Q3 but Recovery Is Incomplete
The U.S. economy grew at a sizzling 33.1% annual rate in the July-September quarter — by far the largest quarterly gain on record — rebounding from an epic plunge in the spring, when the eruption of the coronavirus closed businesses and threw tens of millions out of work. Yet the recovery from the deepest recession […]
As the Causes of US Inflation Grow, so Do the Dangers
Written by CHRISTOPHER RUGABER What keeps driving inflation so high? The answer, it seems, is nearly everything. Supply chain snarls and parts shortages inflated the cost of factory goods when the economy rocketed out of the pandemic recession two years ago. Then it was a surge in consumer spending fueled by federal stimulus checks. Then Russia’s invasion […]
US Inflation Slows for 2nd Month but Remains Stubbornly High
Written by CHRISTOPHER RUGABER U.S. inflation slowed for a second straight month on a sharp fall in gas prices, yet excluding energy most other items got more expensive in August, a sign that inflation remains a heavy burden for American households. Consumer prices surged 8.3% in August compared with a year earlier, the government said Tuesday, down […]
Two Years Into COVID, Was $800B Payroll Aid Plan Worth It?
Written by JOSH BOAK President Donald Trump rolled out the Paycheck Protection Program to catapult the U.S. economy into a quick recovery from the coronavirus pandemic by helping small businesses stay open and their employees working. President Joe Biden tweaked it to try to direct more of the money to poorer communities and minority-owned companies. […]
North Carolina Unemployment Rate Falls to 3.9% in November
Written by THE ASSOCIATED PRESS North Carolina’s jobless rate for November fell to 3.9%, the state Commerce Department announced on Friday, as employment surged by one measurement released by the agency. The seasonally adjusted unemployment rate, which compares to 4.1% in October, continued its year-plus long decline after the state’s economy shook off the tightest […]
US Economy Slowed to a 2% Rate Last Quarter in Face of COVID
Written by MARTIN CRUTSINGER Hampered by rising COVID-19 cases and persistent supply shortages, the U.S. economy slowed to a 2% annual rate in the July-September period, the weakest quarterly growth since the recovery from the pandemic recession began last year. Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product — its […]
US Jobless Claims Hit a Pandemic Low as Hiring Strengthens
Written by PAUL WISEMAN The number of people seeking unemployment benefits fell last week for a fourth straight time to a pandemic low, the latest sign that America’s job market is rebounding from the pandemic recession as employers boost hiring to meet a surge in consumer demand. The Labor Department reported Thursday that jobless claims […]
US Added 943,000 Jobs in July; Unemployment Rate at 5.4%
Written by PAUL WISEMAN Hiring surged in July as American employers added 943,000 jobs. The unemployment rate dropped to 5.4% another sign that the U.S. economy continues to bounce back with surprising vigor from last year’s coronavirus shutdown. The July numbers exceeded economists’ forecast for more than 860,000 new jobs. Hotels and restaurants, reopening and […]
On Air Today: Dr. Michael Walden and Aaron Nelson
The Chamber for a Greater Chapel Hill-Carrboro held its latest forum in its Current Issues Series on Thursday, this one with a focus on the economy. Dr. Michael Walden, the guest speaker, and President of the Chamber Aaron Nelson joined 97.9 the Hill's Brighton McConnell to discuss major takeaways from the forum, like the country's economic outlook and why the regional economy is poised to fully rebound from the COVID-19 pandemic.
›