The U.S. economy shrank at a 32.7% annual rate in the second quarter of 2020 and at a 5% pace in the first. The decline was driven by a big collapse in private consumption, concentrated in the services sector. Shutdowns to stem the spread of the coronavirus had a deep impact on the economy, particularly on the services sector. Economic forecasts project a rebound in the third quarter that would recoup about half of the output lost in the first half of the year. To return to the previous peak recorded in the final quarter of last year, the economy would need to grow at roughly the same pace in the fourth quarter, but private forecasts point to a much lower (single-digit) growth rate, suggesting the recovery will be protracted.

The economic policy response was prompt and strong in the early phase of the pandemic (equivalent to 13% of GDP).The size and content of another package of still much needed relief measures is currently under discussion. The economic outlook remains highly uncertain, as it depends on containing the spread of the virus, developing an effective vaccine, and on new policy measures to support the recovery.