Trump’s dream of a V-shape economic rebound from coronavirus slowly slips away
- US gross domestic product shrank a record 32.9 per cent on the year in the second quarter amid the coronavirus fallout
- The question for President Trump is whether conditions can snap back in the months leading up to November’s election
This story is published in a content partnership with POLITICO. It was originally reported by Ben White on politico.com on July 30, 2020.
The US economy shrank at a 32.9 per cent annualised pace between April and June as the coronavirus slammed businesses and consumers, the Commerce Department said on Thursday, marking the nation’s worst quarterly contraction on record.
Separately, the Labour Department said Thursday that initial claims for jobless benefits rose to 1.43 million last week. New filings had been slowing into mid-July, but surged again due to many states reversing their reopening plans.
At least for the moment, the spike in Covid-19 cases, the potential for fresh trouble this fall and a bitter fight over how to pump more federal money into the ailing economy suggest the sharp bounce-back Trump is counting on may not show up in a way he envisions.
And the potential for another leg of the downturn hangs over a president who once counted the economy as by far his strongest selling point to voters.
“This is obviously the ugliest quarter we’ve ever seen in our history,” Edward Moya, senior analyst at currency trading firm Oanda, said of initial second quarter gross domestic product numbers coming out Thursday morning. “A couple of weeks ago there was a lot more optimism that we would see a strong V-shaped recovery.” But right now “there is a lot of bad news about how some areas are handling the virus. And every day we don’t have a new stimulus agreement in place is hurting the economy.”