U.S. GDP Falls In Second Quarter

The Bureau of Economic Analysis (BEA) released its Advance Estimate of U.SGross Domestic Product (GDP) for the three months ending June 30, 20201. GDP declined at an annualized rate of 32.9% for the second quarter. This follows the 5% annualized decline reported for first quarter. A negative GDP report was expected, but the estimate was slightly better than consensus estimates of a 34.5% decline. This was the largest quarterly decline of U.S. GDP on record. As normal, this Advance Estimate will be updated twice as additional data is gathered over the next two months.    

The government ordered shutdowns and stay-at-home orders earlier this year impacted economic activity. The U.S. consumer, who makes up approximately two-thirds of the U.S. GDP, reduced spending during the quarter. Personal consumption declined at an annualized rate of 34.6%2. The decreased spending was broad but was led by health care and clothing and footwear. Declines were broad-based (e.g. exports, private inventory investment, nonresidential investment, etc.) and overall, somewhat offset by increased federal government spending. Personal income increased modestly in second quarter supported by government payments (e.g. CARES Act stimulus checks and unemployment benefits). Finally, personal savings rates, as a percentage of disposable income, increased by 25.7%.      

Update on Jobs 

Also released this week, 1.433 million individuals filed initial claims for unemployment benefits for the week ending July 25. The U.S. Labor Department said this was an increase of 12,000 from the prior week. As of July 18, approximately 17 million Americans had filed for ongoing unemployment benefits.   

Second Quarter Market Commentary 

Multnomah Group recently hosted a webinar reviewing the capital markets for the second quarter. To watch the webinar recording, click here. 


1 https://www.bea.gov/news/2020/gross-domestic-product-2nd-quarter-2020-advance-estimate-and-annual-update

2 https://www.bloomberg.com/news/articles/2020-07-30/u-s-economy-shrinks-at-record-32-9-pace-in-second-quarter?srnd=premium

3 https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20201487.pdf


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