US economy shrinks 32.9%, biggest decline since 1940s – business live

US GDP plunges at 32.9% annualised rate in second quarter, jobless claims rise for second week; share sell-off steps upGermany suffers biggest economic decline since records began in 1970 Mid-morning summary: European stock markets tumbleIntroduction: Lloyds, Shell post big losses 2.39pm BST On Wall Street, stocks are also tumbling. The Dow Jones fell more than 300 points at the open to 26,215, a 1.2% drop, while the S&P 500 shed 35 points, or 1%, to 3,223 and the Nasdaq lost nearly 100 points, or 0.9%, to 10,446. 2.31pm BST US GDP: Hopes for a V-shaped recovery are misplaced, says James Knightley, chief international economist at ING.So we now know how deep the deepest ever contraction in US economic activity was, but this is old news given financial markets are priced for a very vigorous recovery. However, Covid-19 is far from beaten and while there is optimism about a vaccine, the timing and its efficacy are still unknown.Meanwhile, a renewed spike in cases is forcing state governors to backtrack on reopening plans, which is closing businesses, with workers losing their jobs. At the same time, the $600 a week unemployment benefit boost to 30 million plus claimants has effectively ended and will likely be replaced with something much smaller in size.The 32.9% annualized contraction in US GDP in Q2 was naturally mainly due to the 34.6% plunge in consumption, given cons. normally makes up near 70% of GDP. Inventories and a drop in investment also weighed on growth, while net trade and gov spending made a positive contribution pic.twitter.com/u7zulb3HdD Continue reading…
Via: US economy shrinks 32.9%, biggest decline since 1940s – business live