The pandemic recession — and the widespread U.S. business closures it spawned — weighed on nearly all industries, as restaurants, hotels and entertainment businesses fared the worst.
U.S. gross domestic product shrank at a 31.4% annualized rate in the second quarter, the Commerce Department’s third estimate showed Wednesday. Twenty of 22 industry groups contributed to the decrease in output during the period. The category of arts, entertainment, recreation, accommodation and food services plummeted an annualized 91.5% and subtracted about 6.6 percentage points from GDP.
Covid-19 and the measures taken to curb its spread catapulted the U.S. economy into the deepest contraction since at least the 1940s. Retail sales and housing are among some areas of the economy that have since rebounded, surpassing pre-pandemic levels and setting up third-quarter economic growth to be the strongest on record.
The MNI Chicago Business Barometer on Wednesday jumped in September to the highest reading since the end of 2018, underscoring a resurgence in manufacturing. Orders and production grew at faster rates than a month earlier.
The labor market, however, still has a long way to go. The total value of economic output will likely remain below pre-pandemic levels when the government issues its first GDP estimate for the July to September period on Oct. 29.
A separate report from ADP Research Institute on Wednesday showed companies added 749,000 jobs in September, more than forecast. Still, ADP’s measure of private employment is more than 10 million below its pre-pandemic level.
Transportation and warehousing, which includes airlines, suffered an almost 65% annualized decline in output during the second quarter, while manufacturing dropped at a 36.6% pace. Retail trade decreased 31.2%, education and health care fell nearly 47%, and business services were down about 30%. Other service-related business excluding government declined an at a 58.8% annual rate.
Private service providers subtracted 23.5 percentage points from second-quarter GDP while goods producers subtracted 5.9 percentage points.
Only the federal government and finance and insurance industry added to GDP.
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