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Thomas StorringDirector – Economics and Statistics
Tel: 902-424-2410Email:

September 30, 2020

The Bureau of Economic Analysis (BEA) released the Q2 2020 US Real Gross Domestic Product (GDP) “third” estimate today. In the third estimate, the US economy declined 31.4 per cent (seasonally adjusted annualized rate, chained 2012 dollars) in Q2 2020, reflecting an upward revision from the “second” estimate of -31.7 per cent. With the third estimate, personal consumption expenditures (PCE) decreased less than previously estimated, with the upward revision partly offset by downward revisions to exports and nonresidential fixed investment.

The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, non-residential fixed investment, private inventory investment, residential fixed investment, and state and local government spending. These declines were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

BEA noted that the decline in second quarter GDP reflected policy responses to COVID-19, with "stay-at-home" orders issued in March and April partially lifted in some areas of the country in May and June, and government pandemic assistance payments distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses cancelled, restricted, or redirected their spending. BEA also noted that the full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified.

Personal consumption expenditures declined 33.2 per cent in Q2 (in real terms at an annualized rate) compared to a decrease of 6.9 per cent in the previous quarter. Expenditure on goods decreased 10.8 per cent in Q2 on declines in both durable and non-durable goods. Expenditure on services declined 41.8 per cent.  Non-residential investment declined 27.2 per cent with declines in structures, equipment, and intellectual property. Residential investment declined 35.5 per cent. Exports declined 64.4 per cent with lower goods exports and services exports. Imports declined 54.1 per cent.

US nominal GDP declined 32.8 per cent in Q2, compared to -3.4 per cent growth reported in Q1. The personal consumption expenditure price index decreased 1.6 per cent, following a 1.3 per cent increase in the previous quarter.



A seasonally adjusted annualized rate shows what the percent change would be if the quarterly rate continued for four quarters. It is computed by compounding the quarterly rate for four quarters. Reporting annualized rates facilitates comparability between annual and quarterly growth, but can exaggerate change when series are volatile. The COVID-19 shocks do not indicate a contraction of US GDP by 31.4 per cent in Q2.  It would take four quarters of compounded contraction at the same pace as reported in Q2 to reduce US GDP by 31.4 per cent. Real GDP in Q2 contracted 9.0 per cent compared to Q2 2019. 


Source: US Bureau of Economic Analysis

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