WASHINGTON -- The government today will issue its first estimate of U.S. economic activity for the April-June quarter, and it's expected to have show a record-shattering contraction.
A plunge in consumer spending as people stayed home and avoided shopping, traveling or gathering in crowds amid the coronavirus pandemic is estimated to have sent the economy sinking at a roughly 30% annual rate in the quarter, economists predict.
That would be more than triple the previous worst quarterly economic fall, a 10% drop set in 1958. Depressed activity in such areas as business investment, home construction and government spending also likely contributed to the worst quarterly contraction on records dating to 1947.
So dizzying was the contraction last quarter that most analysts expect the economy to manage a sharp bounce-back in the current July-September quarter, perhaps of as much as 17% or higher on an annual basis.
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Yet with the rate of confirmed coronavirus cases now rising in a majority of states, more businesses being forced to pull back on reopenings and the Republican Senate proposing to scale back the government's aid to the unemployed, the economy could worsen in the months ahead.
The Trump administration is betting against that outcome in asserting that the economy will undergo a V-shaped recovery in which last quarter's plunge would be followed by an impressive rebound in the current quarter -- a hoped-for dose of good news that would be reported in late October, not long before Election Day.