The BBVA Research team published its economic analysis of the drop in gross domestic product for second quarter 2020, noting it is the steepest decline in over-the-quarter growth since 1937, in the aftermath of the Great Depression.
As noted in the published analysis, the GDP dropped by 32.9 percent on an annualized basis and has contracted more than $2 trillion, implying a drop of 9.5 percent year over year.
The report underscores how idiosyncrasies of the COVID-19 pandemic have led to unusual fluctuations in consumption and investment that could continue over time. Personal consumption expenditures dropped by more than 34 percent in the second quarter. While the consumption of both goods and services dropped, consumption of motor vehicles and recreational equipment actually increased. Purchases of household furnishings fell by more than 10 percent, while consumption of clothing and footwear dropped to levels not seen since 2009.
Growth for the first half of 2020 has been exactly in line with the economic outlook published by BBVA Research in April, and the team is maintaining its expectations for growth in 2020 of -5.1 percent. However, recent spikes in the number of Covid-19 in hotspots around the country and the resulting shift to more cautious behavioral responses suggest that the risks are firmly tilted to the downside, according to the report.
Led by Nathaniel Karp, BBVA USA’s research team analyzes the U.S. economy and Federal Reserve monetary policy. For its analyses, the economists create models and forecasts for growth, inflation, monetary policy and industries. The Economic Research team also follows a variety of issues that affect the Sunbelt states where BBVA USA operates. Follow their work on Twitter @BBVAResearch and @BBVANews_USA.
Read the full analysis here.
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