Q2 GDP Second Estimate: Real GDP at Record -31.7%

The Second Estimate for Q2 GDP, to one decimal, came in at -31.7% (-31.70% to two decimal places), a major drop from -5.0% (-4.99% to two decimal places) for the Q1 Third Estimate. Investing.com had a consensus of -32.5%.

Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:

Real gross domestic product (GDP) decreased at an annual rate of 31.7 percent in the second quarter of 2020 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the decrease in real GDP was 32.9 percent. With the second estimate, private inventory investment and personal consumption expenditures (PCE) decreased less than previously estimated (see "Updates to GDP" on page 2).

Coronavirus (COVID-19) Impact on the Second-Quarter 2020 GDP Estimate

The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note. [Full Release]

Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.06% average (arithmetic mean) and the 10-year moving average, currently at 1.25.

Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 23.1% below trend.

A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.27%. All eleven recessions over this timeframe have begun at a lower level of current real YoY GDP.

In summary, the Q2 GDP Second Estimate of -31.7 was slightly higher than expected, but an all-time record low for GDP.