How bad was it? Second Quarter GDP fell at an annual rate of 31.7 percent.

Not since economists began keeping track has the economy contracted so sharply in a single quarter. The U.S. Bureau of Economic Analysis reports,

Real gross domestic product (GDP) decreased at an annual rate of 31.7 percent in the second quarter of 2020, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the decrease in real GDP was 32.9 percent. With the second estimate, private inventory investment and personal consumption expenditures (PCE) decreased less than previously estimated.

Here’s what that looks like.

Read the BEA release for more details. The Associated Press reports it’s the sharpest drop in history.

The previous worst quarterly drop since record-keeping began in 1947 was a 10% annualized loss in 1958.

Last quarter, businesses shuttered and millions of workers lost jobs as the world’s largest economy went into lockdown mode in what succeeded only fitfully in limiting the spread of reported viral infections. The U.S. economy fell an annualized 5% in the first three months of the year as the coronavirus began to make its presence felt in February and March.

A bounce-back in hiring as many businesses reopened suggested that the economy began to recover in June with third quarter growth estimated to be around 20% annualized. But economists say a full recovery remains far off given that the virus has yet to be contained and the government’s financial support has faded.

Prospects for additional federal aid to state and local governments remain dim. And even though state tax collections have been better than forecast for two consecutive months, the decline in revenue has created a multi-billion dollar budget shortfall. Delay in addressing the problem has consequences, which is why major newspapers and budget experts have called on the governor and legislative leaders to call a special session to act now. Waiting for the feds or a rapid economic recovery is not a strategy. The hole is deep and the clock is ticking.