WASHINGTON – The U.S. economy plunged at an unprecedented rate this spring and even with a record rebound expected in the just-ended third quarter, it will likely shrink this year, the first time that has happened since the Great Recession.
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 Commerce Department reported Wednesday.
The government's last look at the second quarter showed a decline that was more than three times larger than the fall of 10% in the first quarter of 1958 when Dwight Eisenhower was president, which had been the largest decline in U.S. history.
Economists believe the economy will expand at an annual rate of 30% in the current quarter as businesses have reopened 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.
Markets rally on rumored aid
U.S. stocks rallied Wednesday, but only after zooming up, down and back up again.
Prospects for additional support from Congress for the economy helped drive trading. The S&P 500 shot to a gain of as much as 1.7% after Treasury Secretary Steven Mnuchin told CNBC he would talk with House Speaker Nancy Pelosi about a potential deal.
The S&P 500 hit its lowafter Pelosi said she and Mnuchin “found areas where we are seeking further clarification.”
By the end of trading, the S&P 500 rose 27.53 points, or 0.8%, to 3,363.00. The Dow Jones Industrial Average gained 329.04, or 1.2%, to 27,781.70, and the Nasdaq composite added 82.26, or 0.7%, to 11,167.51.