The US economy shrank at a 33% annual rate between April and June as the country grappled with lockdowns and spending cutbacks.
It was the deepest decline since the government began keeping records in 1947 and three times more severe than the prior record of 10% set in 1958. Reduced spending on services such as healthcare drove the fall.
Economists said they expected to see the sharpest drop in the second quarter, with recovery thereafter. But as virus cases surge and some areas reimpose restrictions, the rebound is showing signs of stalling.
Over 1.4 million filed new unemployment claims last week, up slightly from the prior week. Other data points to spending cuts and falls in confidence in July.
Jerome Powell, head of America’s central bank, warned of renewed slowdown, describing the downturn as the “most severe in our lifetimes.” He urged further government spending to help households and businesses weather the crisis.