U.S. Economic Activity Cut in Half in Second Quarter?

May 31, 2020 (EIRNS)—The Atlanta Fed’s closely followed GDPNow tracker on May 29 estimated a ˗51.2% annual rate of shrinkage for U.S. GDP in the second quarter of 2020. Only two days before it had estimated ˗ 40.4%. Its explanation was: “After this morning’s Advance Economic Indicators report from the U.S. Census Bureau and personal income and outlays release from the U.S. Bureau of Economic Analysis, the nowcast of second-quarter real personal consumption expenditures growth decreased from -43.3% to -56.5% and the nowcast of the contribution of change in real net exports to second-quarter real GDP growth decreased from 2.07 percentage points to 0.73 percentage points.”

At the same time a survey conducted by financial services company Azlo found that nearly half of small business owners contacted think they will have to close their businesses for good. Some 47% of the owners surveyed said they anticipate shutting down, and 41% said they are looking for full-time work elsewhere. This is on top of the small businesses that have already shut down and will never reopen.

Less than half of participants—38%—involved in this survey had applied for payroll protection program (PPP) loans. Of those who did apply, 37% said the program was too slow to distribute funds to really help them.

Before this economic collapse, small businesses employed just under 60 million Americans.

At the same time as this small business elimination, large airlines, aircraft production companies, international automakers, and large and small oil companies are laying off workers by thousands and even tens of thousands at once.