U.S. gross domestic product plunge

GDP crash

U.S. gross domestic product plunged at a 32.9% annualized rate in the second quarter of 2020, showing the depth of the coronavirus pandemic’s effect on the health of the American economy.

Gross domestic product is the broadest measure of everything produced by U.S. workers, private capital and the government. In 2019 that came to about $19.2 trillion adjusted for inflation. In 2020, that number has fallen enormously because of the COVID-19 pandemic, with the largest drop in history during the second quarter.

Three large aspects of the economy are particularly reflective of the pandemic’s impact. Overall consumer spending has suffered with millions of people out of work, government spending has soared because of the CARES act and business investment has languished with companies so unsure of the future.

Consumer spending

Consumer spending has historically been the driving force behind GDP, accounting for roughly two thirds of the total. The pandemic has had a big effect on how consumers spend their money. Spending on goods has remained relatively buoyant as people stocked up on food and other essentials, while stay-at-home orders and restaurant and bar shutdowns hit the service sector quite hard.

Consumer spending since 2002

Government spending

The U.S. government has spent money at an unprecedented pace to cushion the blow to households and businesses from the pandemic. That is most reflected in a nearly 40% increase in non-defense government spending during the second quarter. This massive bump in spending fueled a range of crisis relief programs, including a $1200 check to all qualifying Americans, enhanced unemployment benefits of $600/week on top of normal state programs, and a range of programs targeted at supporting businesses from airlines to pizza shops.

Non-defense government spending since 2002

Business investment

Business spending also retreated sharply as many companies are canceling capital spending projects due to overall insecurity.

Business investment since 2002


Headline chart is real GDP, percent change from preceding period, quarterly, seasonally adjusted annualized rate

Editing by Dan Burns


U.S. Commerce Department