Despite the largest quarterly drop in history, the U.S. economy has "one bright spot" despite the coronavirus pandemic — an increase in the personal savings rate, Minneapolis Fed President Neel Kashkari said on Sunday.
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"The U.S. personal savings rate has taken off," Kashkari told "Face the Nation." "Before the crisis, it was around 8%. Now it's around 20%. Now, let me tell you what's going on."
"Those of us who are fortunate enough to still have our jobs, we're saving a lot more money because we're not going to restaurants or movie theaters or vacations," he explained further. "That actually means we have a lot more resources as a country to support those who've been laid off. And so while historically we would worry about racking up too much debt, we're generating this savings ourselves."
The U.S. economy shrank at a dizzying 33% annual rate in the April-June quarter — by far the worst quarterly plunge ever — when the viral outbreak shut down businesses, throwing tens of millions out of work and sending unemployment surging to 14.7%, the government said Thursday.
The Commerce Department's estimate of the second-quarter decline in the gross domestic product, the total output of goods and services, marked the sharpest such drop on records dating to 1947. The previous worst quarterly contraction, a 10% drop, occurred in 1958 during the Eisenhower administration.
The Associated Press contributed to this report.