4 truths about America's rapidly shrinking economy

The U.S. Bureau of Economic Analysis released its quarterly data on Thursday, showing a shocking 9.5 percent decline in GDP during the second quarter of 2020.

Here are four quick takeaways:

1) The economy is in the toilet. This is by far the worst single-quarter decline recorded in statistics that go back to 1947, and likely the worst in American history. In per capita terms, the economy shrank back to its size in mid-2013 in just three months. New unemployment claims have been holding steady for weeks at a level several times higher than the worst point of the Great Recession.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.


Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

2) The coronavirus rescue packages are working. Roughly three-quarters of the GDP loss was due to a collapse in personal spending, which fell by over $1.3 trillion. However, overall personal income actually grew by 7.3 percent, thanks entirely to the boost to unemployment insurance, the economic impact payments, and other government rescues. Many are suffering or left out, but the bulk of the American people are scraping by for the moment.

3) Recovery is not coming soon. Studies demonstrate that it is not government closures that cause most of the decline in spending, but instead the presence of coronavirus. Because President Trump has allowed the pandemic to rage, the economy will not return to its previous strength for the indefinite future.

4) If the rescues are not renewed, heaven help us. America is in a severe emergency that will get much worse on the current track. Super-unemployment is in the process of expiring across the country, and Republicans recently proposed slashing it by two-thirds. That will likely end with tens of millions being thrown out on the street.

Continue reading for free

We hope you're enjoying The Week's refreshingly open-minded journalism.

Subscribed to The Week? Register your account with the same email as your subscription.

Ryan Cooper

Ryan Cooper is a national correspondent at TheWeek.com. His work has appeared in the Washington Monthly, The New Republic, and the Washington Post.