Market participants are bracing for Thursday’s second-quarter gross domestic product (GDP) report to show the worst contraction in US economic activity in the post-World War II era, after the coronavirus pandemic forced business closures and disrupted daily activity for much of the April through June period.

Here are the main metrics expected from the Bureau of Economic Analysis’ advance Q2 GDP report, set for release Thursday at 8:30 a.m. ET, compared to consensus estimates compiled by Bloomberg:

  • Q2 GDP annualized, quarter over quarter: -34.5% expected vs. -5.0% in Q1

  • Q2 Personal consumption: -34.5% expected vs. -6.8% in Q1

  • Core Personal consumption expenditures, quarter over quarter: -0.9% expected vs. 1.7% in Q1

If GDP comes in at a 34.5% annualized contraction as expected, it would mark by far the worst plunge ever recorded, based on Bureau of Economic Analysis data spanning back to 1947. Before the pandemic, the worst GDP print on record was in the first quarter of 1958, when GDP fell 10.0% on an annualized basis.

US economic activity contracted by 5.0% in the first quarter of 2020, which captured only the start of the coronavirus pandemic and business shutdowns in March.

Estimates for the margin of decline in second-quarter GDP spanned a relatively wide range. On the low end, several economists expected GDP sank as much as 40%. On the high end, Mizuho Securities economists estimated GDP declined by 25% in the second quarter. The Atlanta Federal Reserve’s closely watched GDPNow tool forecast a 32.1% decline in second-quarter GDP, as of Wednesday’s estimate.

Consumer-driven downturn

The second-quarter cliff in economic activity was driven by a drop-off in consumer spending, which is expected to appear as a 34.5% drop in the personal consumption metric in Thursday’s report. Consumer spending comprises about two-thirds of the US economy, and prior to the pandemic had been the main engine of economic growth.

But spending sputtered during the second quarter, with businesses forced to close from mid-March onward to accommodate social distancing due to the coronavirus outbreak. Spending at retailers sank by a record 14.7% in April, according to the Commerce Department, before rebounding in each of May and June.

“In contrast to prior recessions, where plunging investment and inventories have usually been the biggest drivers, the coronavirus downturn has been mainly the result of an unprecedented collapse in consumption as lockdown measures imposed in late March forced consumers to stay at home,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said July 24.

“Business and residential investment both also fell back, but the overall decline is likely to have been relatively modest,” he added. “Meanwhile, despite the huge fiscal stimulus, the vast majority of those funds were transfers to individuals and firms and, with spending by state and local governments contracting in the face of budget shortfalls, government spending was probably a small negative for growth.”

NEW YORK, NEW YORK – JULY 01: A woman wearing a mask walks past ‘Store Closing’ and ‘Nothing Held Back’ signs. (Photo by Alexi Rosenfeld/Getty Images)

The sharp contraction in activity across sectors in April and early May was likely to have outweighed any initial rebound at the tail end of the quarter, when shutdown measures eased and supply chains and businesses came back online. Data released over the past several months showed new home-building slumped by the most on record in April before increasing in each of May and June. And core capital goods shipments, which are used to calculate equipment spending in GDP, followed a similar trend, falling 6.4% in April before rising 1.6% in May and 3.4% in June.

“With delays in construction projects and home buyers remaining on the sidelines during the early stages of the pandemic, residential investment likely fell notably in Q2 despite the strong rebound towards the end of the quarter,” Nomura economists led by Lewis Alexander said in a note. “Both imports (-44.9%) and exports (-67.7%) collapsed in Q2 amid steep declines in both domestic and foreign demand. The larger drop in exports likely led to a substantial drag on growth from net exports.”

With July coming to a close, and with many states having struggled to contain a resurgence in coronavirus cases, a number of economists noted that the pace of recovery coming out of the second quarter may be slower than the quick bounce some had anticipated.

“While the initial rebound in monthly activity was stronger than expected, the recent flattening in high frequency indicators suggests a more gradual pace of recovery from here,” Alexander said.

This post will be updated with results of the Q2 GDP report Thursday at 8:30 a.m. ET.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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