U.S. Economy Crashes By Most Ever In Second Quarter, Gold & Silver Shrug After Being Walked-Down Overnight

“The full economic effects of the COVID-19 pandemic cannot be quantified…”

(by Half Dollar) The Bureau of Economic Analysis has just released its advance estimate for second quarter GDP – economic growth in the United States, or, in this case, as was the case last quarter, economic contraction.

Prior to the estimate, we see the consensus range was pretty wide, such as in this example, via Econoday:

It isn’t a matter of contraction, but rather, how much of a contraction?

At 8:30 a.m. EST, the BEA’s first official Q2 GDP report hit the tape.

The contraction pretty much falls in line with the consensus:

From the report:

The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.

The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).

The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment), while the decrease in residential investment primarily reflected a decrease in new single-family housing.

Current‑dollar GDP decreased 34.3 percent, or $2.15 trillion, in the second quarter to a level of $19.41 trillion. In the first quarter, GDP decreased 3.4 percent, or $186.3 billion (table 1 and table 3).

The price index for gross domestic purchases decreased 1.5 percent in the second quarter, in contrast to an increase of 1.4 percent in the first quarter (table 4). The PCE price index decreased 1.9 percent, in contrast to an increase of 1.3 percent. Excluding food and energy prices, the PCE price index decreased 1.1 percent, in contrast to an increase of 1.6 percent.

Personal Income and Outlays

Current-dollar personal income increased $1.39 trillion in the second quarter, compared with an increase of $193.4 billion in the first quarter. The increase in personal income was more than accounted  for by an increase in personal current transfer receipts (notably, government social benefits) that was partly offset by declines in compensation and proprietors’ income (table 8). Additional information on several factors impacting personal income can be found in “Effects of Selected Federal Pandemic Response Programs on Personal Income.”

Disposable personal income increased $1.53 trillion, or 42.1 percent, in the second quarter, compared with an increase of $157.8 billion, or 3.9 percent, in the first quarter. Real disposable personal income increased 44.9 percent, compared with an increase of 2.6 percent.

Personal outlays decreased $1.57 trillion, after decreasing $232.5 billion. The decrease in outlays was led by a decrease in PCE for services.

Personal saving was $4.69 trillion in the second quarter, compared with $1.59 trillion in the first quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 25.7 percent in the second quarter, compared with 9.5 percent in the first quarter.

Some of those numbers numbers are off the charts.

With a horrible print in Q1, and a downright atrocious print in Q2, the worst ever, and arguably even worse than the worst ever since Americans are so debt laden and broke, the mainstream media is still dishing out the spin, as evidenced by Bloomberg saying “a recent surge in infections has tempered the pace of the recovery”.

Here’s the question: With so much government and Fed intervention into all things related to the markets and the economy, are we even recovering, or are we still collapsing, albeit temporarily masked by the rigging?

After being walked-down throughout the night, gold & silver didn’t even shrug at the news:

After all, it’s not GDP that people are looking to, but rather, people are looking to the next round of stimulus from the Federal Government.

Which means any weakness in gold & silver here, ahead of the US Federal government’s next direct injection of funny money into the system, is totally looking like a gift horse to those who are willing and able.