In this Sept. 2, 2020 file photo, pedestrians walk past a business storefront with store closing and sale signs in Dedham, Mass. (AP Photo/Steven Senne)
By Martin Crutsinger
The U.S. economy plunged at a record rate in the spring but is poised to swing to a record increase in the quarter that is just ending.
The Commerce Department reported Wednesday that the gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago.
The new report, the government’s last look at the second quarter, showed a decline that was more than three times larger than the previous record-holder, a fall of 10% in the first quarter of 1958 when Dwight Eisenhower was president.
Economists believe the economy will expand at an annual rate of 30% in the current quarter as businesses have re-opened and millions of people have gone back to work. That would shatter the old record for a quarterly GDP increase, a 16.7% surge in the first quarter of 1950 when Harry Truman was president.
The government will not release its July-September GDP report until Oct. 29, just five days before the presidential election.
While President Donald Trump is counting on an economic rebound to convince voters to give him a second term, economists said any such bounce back this year is a longshot.
Economists are forecasting that growth will slow significantly in the final three months of this year to a rate of around 4% and could actually topple back into a recession if Congress fails to pass another stimulus measure or if there is a resurgence of COVID-19. There are upticks in infections occurring right now in some regions of the country, including New York.
“There are a lot of potential pitfalls out there,” said Gus Faucher, chief economist at PNC Financial Services. “We are still dealing with a number of significant reductions because of the pandemic.”
He said in addition to the possibility that Congress will not pass further stimulus support because of the sharp split between Democrats and Republicans over how much more is needed, there are other threats in the form of uncertainty over the upcoming election.
“All this political uncertainty has the potential to weigh on economic growth,” Faucher said.
The Trump administration says that solid growth in coming quarters will restore all of the output lost by the pandemic.
So far this year, the economy fell at a 5% rate in the first quarter, signaling an end to a nearly 11-year-long economic expansion, the longest in U.S. history. That drop was followed by the second quarter decline of 31.4%, which was initially estimated two months ago as a drop of 32.9%, and then revised to 31.7% last month.
The slight upward revision in this report reflected less of a plunge in consumer spending than had been estimated. It was still a record fall at a rate of 33.2%, but last month projections were for a decline of 34.1%. This improvement was offset somewhat by downward revisions to exports and to business investment.
The Rev. Al Sharpton is set to lead a protest march on Wall Street to urge corporate America to resist the Trump administration’s campaign to roll back diversity, equity and inclusion initiatives. The New York civil rights leader will join clergy, labor and community leaders Thursday in a demonstration through Manhattan’s Financial District that’s timed with the anniversary of the Civil Rights-era March on Washington in 1963. Sharpton called DEI the “civil rights fight of our generation." He and other Black leaders have called for boycotting American retailers that scaled backed policies and programs aimed at bolstering diversity and reducing discrimination in their ranks.
President Donald Trump's administration last month awarded a $1.2 billion contract to build and operate what's expected to become the nation’s largest immigration detention complex to a tiny Virginia firm with no experience running correction facilities.
Chipmaker Nvidia is poised to release a quarterly report that could provide a better sense of whether the stock market has been riding an overhyped artificial intelligence bubble or is being propelled by a technological boom that’s still gathering momentum.
Cracker Barrel said late Tuesday it’s returning to its old logo after critics — including President Donald Trump — protested the company’s plan to modernize.
Low-value imports are losing their duty-free status in the U.S. this week as part of President Donald Trump's agenda for making the nation less dependent on foreign goods. A widely used customs exemption for international shipments worth $800 or less is set to end starting on Friday. Trump already ended the “de minimis” rule for inexpensive items sent from China and Hong Kong, but having to pay import taxes on small parcels from everywhere else likely will be a big change for some small businesses and online shoppers. Purchases that previously entered the U.S. without needing to clear customs will be subject to the origin country’s tariff rate, which can range from 10% to 50%.
Southwest Airlines will soon require plus-size travelers to pay for an extra seat in advance if they can't fit within the armrests of one seat. This change is part of several updates the airline is making. The new rule starts on Jan. 27, the same day Southwest begins assigning seats. Currently, plus-size passengers can pay for an extra seat in advance and later get a refund, or request a free extra seat at the airport. Under the new policy, refunds are still possible but not guaranteed. Southwest said in a statement it is updating policies to prepare for assigned seating next year.
Cracker Barrel is sticking with its new logo. For now. But the chain is also apologizing to fans who were angered when the change was announced last week.
Elon Musk on Monday targeted Apple and OpenAI in an antitrust lawsuit alleging that the iPhone maker and the ChatGPT maker are teaming up to thwart competition in artificial intelligence.
