It’s been reported by Statistics Canada this morning that the second quarter saw real GDP fall by 11.5% as a result of the ongoing coronavirus pandemic. Worst yet, on an annualized basis the tumble amounted to a 38.7% decline in GDP, as compared to 31.7% posted by the US for the same period. Lockdowns throughout the country for much of April and May, combined with the beginnings of re-openings in June are largely to blame for the poor GDP print.
The decline was the worst on record, with records for such data going back as far as 1961. The decline indicated a sharp decline in household spending, to the tune 13.1%, consisting of goods falling 8.4%, while services fell an astounding 16.7%. Business investment meanwhile fell 16.2%, while exports and imports fell 18.4% and 22.6% respectively.
Declines were felt in many areas across the board, with items such as new passenger cars seeing a 37.8% decline in consumption, accommodation services falling 45.6% and transportation services falling an astounding 79.2%.
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On a more personal basis, compensation of employees fell by 8.9% as a result of numerous operations being forced to shutter their doors for months on end, marking the steepest drop ever recorded. The only bright side to this, is that household savings rates rose to 28.2% from 7.6% last quarter. Disposable income also rose by 10.8% as a result of the numerous government programs offered to the public.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
