AILSA CHANG, HOST:
We're going to need a bigger chart. That is what you might have said this morning if you were trying to graph the historic decline in the nation's economy that started when the coronavirus struck this spring. If you chart the government's official measurement, which shows the economy shrank at an annual rate of 32.9%, the red ink practically spills off the page. It dwarfs any previous downturn since the government started keeping track of these numbers almost 75 years ago. NPR's Scott Horsley joins us now with more. Hey, Scott.
SCOTT HORSLEY, BYLINE: Good afternoon, Ailsa.
CHANG: So tell us, what exactly do these new numbers tell us?
HORSLEY: They tell us, as if we needed any other reminder, that we're living through history.
CHANG: Yeah.
HORSLEY: The first rough draft shows the economy slammed on the brakes this spring as the country tried to slow the spread of the virus. Pretty much all the numbers in this report are negative. But there's a deep drop in consumer spending that led the decline, as shops and restaurants and even doctor's offices closed their doors during the spring. Economist Mark Zandi of Moody's Analytics says the resulting slowdown was the sharpest on record, almost four times what we saw during the worst quarter the Great Recession.
MARK ZANDI: It was cataclysmic. The economy fell into just a deep, dark hole and just highlights how hard it's going to be to get out of that hole.
HORSLEY: We started to claw our way out in May and June, but the strength of the recovery is now in doubt as the virus expands its deadly footprint.
CHANG: Exactly. I mean, in recent weeks we've been seeing a surge in new coronavirus infections. So how is that affecting economic activity right now?
HORSLEY: It's hitting the brakes all over again. You know, some of the worst-hit cities and states have reimposed limits on restaurants and gyms and the like. But even in parts of the country where that hasn't happened, Zandi says consumers are nervous about spending money, and that's limiting the economic rebound.
ZANDI: We were all in our bunkers back in March and April, kind of came out in May and June. Unfortunately, we came out too fast, and now we got one foot back in the bunker.
HORSLEY: Zandi suggests we're not going to have a sustainable economic recovery until there's a vaccine.
CHANG: But are there some parts of the economy that are still doing better than others?
HORSLEY: Yeah, there are, the parts that don't require a lot of face-to-face contact. Homebuilding, for example, is doing OK, high-tech, manufacturing is on the rise. I spoke today with Dennis Earl, who represents autoworkers at a General Motors plant in Toledo. They reopened fairly quickly this spring, and so far, Earl says, they haven't had any real problems with the coronavirus disrupting operations.
DENNIS EARL: Walking in the plant - when you begin to walk in, they maintain a good social distance there because they got it all lined up and marked. Once you're in the plant, it's business as usual, but everybody's masked up. And up until this point, they've been pretty good about maintaining their masks.
HORSLEY: The plant makes transmissions for popular trucks and SUVs, so they've had a lot of demand. And people are working hard to make up for lost time. Still, Earl worries it might not last.
EARL: If the economy hasn't picked up and nobody's buying cars, they'll have to lay off and scale back. So that that could be down the road, all depending upon car sales and all depending about how fast that economy recovers. So you know, we're not out of the woods yet by far.
HORSLEY: One thing that shows up clearly in these GDP numbers is what a big role government relief payments played in propping up the economy, both the $1,200 payments that went out and the supplemental unemployment benefits of $600 a week. As bad as the slump in the spring was, it would have been worse without that government spending.
CHANG: Yeah. Well, those federal unemployment benefits expire tomorrow, and Congress is still debating whether to extend them. So if those payments are so helpful, what is taking lawmakers so long?
HORSLEY: It is kind of a head-scratcher. You know, the president and his GOP allies hope to run for reelection on a strong economy. That's out the window. But you'd think they would want to avoid an even deeper recession. That's one reason Zandi thinks Congress will eventually come around and approve the additional spending. He says it's both good policy and good politics.
ZANDI: They better do it fast, otherwise this economy's going to slip away and so are their election chances.
HORSLEY: When Moody's issued its first forecast of the presidential race almost a year ago, Trump was the favorite for reelection. But he could be another casualty to the coronavirus. Moody's now has Joe Biden as the likely winner.
CHANG: That is NPR's Scott Horsley. Thank you, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
