U.S. GDP drops by $2.2 trillion in Q2

U.S. consumers and businesses downshifted spending in the second quarter, impacting the national economy at a rate never see before. The second quarter's 32.9% contraction broke the previous record low set in the first quarter of 1958 by more than three times; comparatively, the annualized rate fell 8.4% in Q4 2008. The $2.2 trillion decline was led by the two most important legs of the U.S. economy: consumer spending and private investments. Consumer spending fell 34.6%, annualized, during the quarter, while private business spending fell 49% by the same measure.

Personal consumption has historically made up about two-thirds of total gross domestic product, and despite the $1.3 trillion drop, the sector stayed on par with that rate. The bulk of the expenditure declines came from spending on services, particularly recreation and dining out. Goods purchases saw a relatively modest $141 billion drop.

Private business expenditures fell for the third straight quarter, even before the COVID-19 pandemic began to materially impact the economy as non-residential investment and non-farm inventories declined.