The Bureau of Labor Statistics recently annnounced the second-quarter contraction of the US economy was down 9.5% from a year ago, or 33% when “seasonally adjusted at annual rates.”. Since then, I have seen complaints that comparing the 33% rate to the Great Depression is unfair. (I’ve seen 15% for the Great Depression here but 29% may be more accurate.)
To explain the numbers: The economy contracted during the second quarter this year. That 9.5% is the fastest contraction since at least 1875.
"Seasonally adjusted at annual rates" is a good approximation for long-term trends, which is why that's the number typically used. In this case, it's 32.9% which, if it holds, definitely puts us in Great Depression territory. It might not hold up though, because there are circumstances in place now that may not persist over the full year.
Relying on 9.5% is a good approximation if you believe that no jobs have been lost after June 30 (or before April 1), and no additional COVID-19 cases will appear to sicken / kill workers outside that period. Since we're already in August and people continue to lose unemployment insurance, lose jobs, get sick, and die at much higher-than-normal rates, an overall 9.5% contraction is too optimistic, even though it would mean we're worse off than during the Great Recession.
The first quarter (January 1 through March 31) only saw a 5% annualized contraction, so for the 2020 calendar year, we're likely to get a contraction somewhere between that and 33% - but during the first quarter, coronavirus hadn't yet made much impact in the US. (The President, for example, was insisting that the virus would disappear by April.)
If Congress can get benefits to the people who need it, and if we can get the virus under control, and if we can rapidly solve related real problems related to rent, eviction, joblessness, health care, etc., the economy could rebound relatively quickly. Since we're a month past the end of the second quarter and those things haven't happened yet, we're probably looking at a minimum of -15% for the year.
If people continue to fear the virus, to get sick, to stay home, to lose their jobs, and so on, they will continue to be unable to pay for rent, utilities, dining out, and health care. That will make the contraction continue.
Congress could continue the enhanced unemployment benefits, or provide a backstop on rent & mortgage payments. They could also provide support for state & local governments which don't have the option of running a deficit. That would keep money circulating, though they'd likely have to raise taxes (on people who are wealthy & not at risk of losing jobs.) Democrats proposed something similar in May.
Republican politicians, by contrast, have insisted that people who can't find a job during the worst contraction in decades should be left to starve & become homeless. They're also insisting that businesses be required to take only the most minimal steps to combat the virus and insisting that payroll taxes be lowered despite the fact that doing so would provide little or no benefit during this time of decreased demand.