Sharp contractions in personal consumption, exports, inventories, investment and spending by state and local governments all converged to bring down GDP, which is the combined tally of all goods and services produced during the period.
Personal consumption, which historically has accounted for about two-thirds of all activity in the U.S., subtracted 25% from the Q2 total, with services accounting for nearly all that drop.
Spending slid in health care and goods such as clothing and footwear. Inventory investment drops were led by motor vehicle dealers, while equipment spending and new family housing took hits when it came to investment.
Prices for domestic purchases, a key inflation indicator, fell 1.5% for the period, compared to a 1.4% increase in the first quarter when GDP fell 5%, The personal consumption expenditures price index dropped 1.9% after rising a tepid 1.3% in Q1. Excluding food and energy, the “core” PCE prices were off 1.1%.
However, personal income soared, thanks in large part to government transfer payments associated with the coronavorus pandemic. Current-dollar personal income rose more than six-fold to $1.39 trillion, while disposable personal income shot up 42.1% to $1.53 trillion.
Despite the rise, personal outlays tumbled by $1.57 trillion, due in large part to a drop in services spending.
Imports surged 10% for the month, offsetting the 9.4% drop in exports.
Source Article from https://www.cnbc.com/2020/07/30/us-gdp-q2-2020-first-reading.html
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