US Q2 GDP Crashes By A Record 32.9%, Worse Than Great Depression
US Q2 GDP Crashes By A Record 32.9%, Worse Than Great Depression By Tyler Durden for Zero Hedge
The biggest question we had ahead of today’s unprecedented GDP drop was “how do we show it on a chart without losing the impact of all other prints?” Well, for better or worse, this is the best we could come up with: at -32.9% annualized, Q2 GDP just plunged by the most on record, surpassing the previous biggest drop of -10% hit in 1958.
And while the drop – which was generally priced in – was some 5 times worse than the adjusted Q1 GDP of -6.9%, it was just fractionally better than the -34.5% expected. Then again, with a third of the US economy effectively going offline in Q2, a worse outcome than during the great depression, a few percent here and there doesn’t really matter.
Some more details:
The second-quarter decrease in real GDP reflected decreases in consumer spending, exports, inventory investment, business investment, and housing investment that were partially offset by an increase in government spending. Imports, a subtraction in the calculation of GDP, decreased.
That said, the biggest contributor to the overall GDP drop was the crash in consumption – the decrease in consumer spending reflected decreases in services (led by health care) and goods (led by clothing and footwear).
Breaking down the components of GDP we get the following:
- Personal Consumption accounted for the bulk, or -25.05%, of the overall -32.9% GDP drop, and 5x more than the -4.75% Q1 GDP drop
- Fixed Investment subtracted another -5.38% from Q2 GDP, far worse than the modest -0.23% drop in Q1. Nonresidential fixed investment, or spending on equipment, structures and intellectual property fell 27% in 2Q after falling 6.7% prior quarter
- Change in Private Inventories subtracted another -3.98%, 3x more than the -1.34% in Q1
- Net Exports contributed 0.68% to GDP, consisting of a -9.38% drop from Exports offset by a 10.06% boost from imports. The decrease in exports primarily reflected a decrease in goods (led by capital goods).
- Government consumption was a paltry 0.82%, up from 0.22% in the previous quarter