News / Economy

US economy contracts at 31.4% in second quarter of 2020

Wednesday, 30 September 2020 4:21 PM [ Last Update: Wednesday, 30 September 2020 4:25 PM ]

A man walks dogs across a nearly empty 5th Avenue and closed luxury retail stores, during the outbreak of the coronavirus disease (COVID-19), in Manhattan, New York city, New York, US, May 11, 2020.

The US economy has witnessed sharpest contraction in decades during the second quarter of 2020 due to the coronavirus pandemic.

According to the US Commerce Department's third estimate of the country's GDP, gross domestic product plunged at a 31.4% annualized rate last quarter, the deepest drop in output since 1947.

Output was previously reported to have contracted at a 31.7% pace in the second quarter.

However, the experts maintain that the US economy would expand 30% in the current quarter as many of the Americans have returned to their works. The rate would hit the previous record of a quarterly GDP growth, a 16.7% surge in the first quarter of 1950.

The report comes after the chairman of the Federal Reserve has described the US economic outlook 'highly uncertain,' saying that it was "essential" to provide an stimulus in the early stages of the pandemic.

US Fed says outlook uncertain, stimulus 'essential'

The Federal Reserve pledgeS to keep boosting the US economy with low rates to help recover jobs lost in the coronavirus pandemic.

Meanwhile, the Hill Democrats revealed a $2.2 trillion stimulus plan on Monday to revive the $600 federal unemployment benefit and send a second round of stimulus checks to millions of American citizens.

Democrats passed a $3.4 trillion spending package in May, dubbed as "the Heroes Act." It created a platform for further coronavirus relief negotiations with Republicans. though they have lowered their demands and now insist on at least $2.2 trillion in new spending.

US House Speaker Nancy Pelosi also has announced that she is trying to bring Republicans back to the negotiating table with the new proposal.

"Democrats are making good on our promise to compromise with this updated bill, which is necessary to address the immediate health and economic crisis facing America's working families right now," she said in a letter to members of her caucus on Monday.

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