WASHINGTON—The latest economic numbers for the United States may it clear more help for everyday Americans is going to be needed from Congress, according to one analyst.
That analysis followed release last week by the Commerce Department of its initial estimate of economic activity for the second quarter, which showed a 32.9% collapse due to the coronavirus pandemic. But that number comes with a caveat.
"It is important to note that this amount is annualized; the quarter-over-quarter decline was 9.5%," said Curt Long, NAFCU's chief economist and vice president of research. "The coronavirus crisis and subsequent shutdowns brought the economy to a halt from March to May…Although the recession ended in May, the recovery has slowed as states have frozen or backtracked on their reopenings.
NAFCU’s latest Macro Data Flashreport highlighted that "the March to May recession was the shortest and most severe in history with GDP falling more than three times as much as the previous record quarterly decline."
‘Tightening Their Spending’
"Consumers are once again tightening their spending and staying at home more," continued Long. "Layoffs continue and high unemployment will remain well into next year, and likely beyond. Further congressional assistance is critical to mitigating these impacts and keeping households solvent."
According to the Commerce Department, major deductions from real GDP came from personal consumption (-25.1%) – almost entirely in the services sector – and investment (-9.4%). Net exports contributed 0.7%, and government consumption contributed 0.8%.
PCE inflation, the Fed's preferred inflation metric, experienced its first drop since the fourth quarter of 2015, falling 1.9%. Meanwhile, core PCE inflation, excluding food and energy, fell 1.1%.
"Hopefully the recent encouraging reports regarding the development of a vaccine will not disappoint, as it is the surest route to sustained economic growth. Even in the event that those hopes are realized, it will take time to absorb the millions of workers who have been sidelined. NAFCU expects a weak recovery into 2021," Long concluded.