US growth report to show a record-breaking economic plunge

The drop in GDP is expected to be the biggest drop ever recorded

The Commerce Department will issue the latest report on the economy on Thursday and its expected to be a pretty ugly picture.

Continue Reading Below

The first reading on second-quarter gross domestic product is estimated to show a plunge at an annual rate of 34.1 percent. That would be the largest drop ever recorded. The first quarter showed a 5 percent decline.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

The U.S. economy faces a dim outlook as a resurgent coronavirus intensifies doubts about any sustained recovery the rest of the year.

A huge plunge in consumer spending as people stayed home and avoided shopping, traveling or gathering in crowds as the virus raged is expected to show a plunging April-June quarter.

Depressed activity in such areas as business investment, home construction and government spending also likely contributed to the worst quarterly contraction dating to 1947.

Most analysts expect the economy to manage a sharp bounce-back in the current July-September quarter, perhaps of as much as 17 percent or higher on an annual basis.

FED UNDERSCORES SUPPORT FOR ECONOMIC RECOVERY THREATENED BY CORONAVIRUS RESURGENCE

With the rate of confirmed coronavirus cases now rising in a majority of states, more businesses being forced to pull back on re-openings and the Republican Senate proposing to scale back the government's aid to the unemployed, the economy could worsen in the months ahead.

Analysts warn that the outlook could darken still further if Congress fails to enact enough financial aid to replace the expiring $600-a-week federal boost in unemployment benefits or provide sufficient help for businesses and state and local governments.

Senate Republicans released a $1 trillion proposal on Monday that falls far short of a $3 trillion measure the House has passed, leaving an enormous gap for Democrats and Republicans to bridge as some elements of Congress' earlier emergency relief programs run out.

On the topic of unemployment, the Labor Department is expected to say the number of claims for unemployment benefits rose for the second week in a row to 1.45 million, up from 1.416 million the prior week. Since the coronavirus lockdowns began in mid-March some 52.69 million people have filed for jobless claims. An additional 1.45 million would lift that total to 54.14 million, or 33.8 percent of the U.S. workforce.

FED OUTLOOK TURNS GLOOMIER AS CORONAVIRUS SPREADS

Recent reports sketch a cautionary picture of the economy, with weekly applications for unemployment benefits still topping 1 million and consumer confidence falling sharply, with big declines in Michigan, Florida, Texas and California, all of which suffered a resurgence in confirmed virus cases.

CLICK HERE TO READ MORE ON FOX BUSINESS

Economists regard increased government aid as essentially a stop-gap action to keep the recession from deepening further. The most critical need, they agree, is to control the virus, most likely through a vaccine that most likely won't be widely available until next year.

The Associated Press contributed to this article.