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Real GDP plummeted 32.9 percent at an annualized seasonally-adjusted rate in the
advance, or first estimate, for the second quarter of 2020. This was by far the biggest drop in the history of
the series, going back to 1947. The release was in line with most economists’ forecasts of a 30 to 35 percent
drop. The release is backward-looking; most measures of economic activity—employment, retail sales,
housing starts, auto sales, etc.—have improved since April. In June, personal income fell 1.1 percent, but was
still up 7 percent from March; transfer payments fell 8.9 percent over the month as fewer workers were on
unemployment and the disbursal of one-time government stimulus payments faded. Consumer spending rose
5.6 percent in June, following an 8.7 percent increase in May. Personal consumption expenditures on goods
actually exceeded their February levels in June; real durable goods spending was up 9.5 percent from
February and spending on non-durable goods up 2.4 percent. Spending on services, by contrast, was still
down 11.6 percent from February; it is easier to spend on goods while social distancing than on services.