US Real GDP Decline In 2nd Quarter Likely 'Most Severe' Ever - Federal Reserve Chairman

WASHINGTON (UrduPoint News / Sputnik - 11th June, 2020) The contraction in US real Gross Domestic Product (GDP) in the second quarter is expected to be the worst in history as the novel coronavirus pandemic measures continue to take a toll on the world's largest economy, Federal Reserve Chairman Jay Powell said on Wednesday.

"The virus and the forceful measures taken to control its spread have induced a sharp decline in economic activity," Powell told a news conference. "The decline in real GDP in the current quarter is likely to be the most severe on record."

The US economy shrank 5 percent in the first three months of 2020, its worst for a quarter since the 2008 financial crisis. Some economists expect a double-digit contraction for the second quarter through June that when combined with the first quarter, would technically result in the deepest recession in US history.

Powell said despite the labor market's surprise addition of 2.5 million jobs in May, the path for the US economy remained highly uncertain and depended to a significant degree on the path of the pandemic.

"This is the biggest economic shock in the United States and the world in living memory," he said. "We went from the lowest level of unemployment in 50 years to the highest level in close to 90 years, and we did it in two months. Even after the unexpectedly positive May employment report, nearly 20 million jobs have been lost on net since February, and the unemployment rate has risen about 10 percentage points to 13.3 percent."

The Federal Reserve has established a Main Street Lending Program to provide loans to small and medium-sized US businesses to help steer them through financial stress caused by the novel coronavirus pandemic.

Separately, Congress has approved roughly $3 trillion to provide loans and grants to businesses, paycheck protection for workers and personal aid to qualifying US citizens.