BBVA Research publishes 2Q20 Economic Analysis

Rhea-AI Summary

BBVA Research has released an economic analysis detailing a historic drop in U.S. GDP for Q2 2020, reporting a staggering 32.9% annualized decline, the steepest since 1937. This contraction exceeds $2 trillion, marking a 9.5% year-over-year drop. The report highlights significant shifts in consumption patterns influenced by the COVID-19 pandemic, with personal consumption expenditures plummeting over 34%. Despite maintaining a growth forecast for 2020 at -5.1%, rising COVID-19 cases are creating further downside risks.

Positive

• Maintained growth forecast for 2020 at -5.1%, indicating some level of stability amidst the economic downturn.

Negative

• Historic GDP decline of 32.9% in Q2 2020, marking the steepest quarterly contraction since 1937.
• Over $2 trillion contraction implies significant economic disruption.
• Personal consumption expenditures dropped over 34%, with declines in clothing and furnishings reaching levels not seen since 2009.
• Risks for economic growth are tilted negatively due to rising COVID-19 cases.

HOUSTON, Aug. 5, 2020 /PRNewswire/ -- The BBVA Research team published its economic analysis of the drop in gross domestic product for second quarter 2020, noting it is the steepest decline in over-the-quarter growth since 1937, in the aftermath of the Great Depression. 

As noted in the published analysis, the GDP dropped by 32.9 percent on an annualized basis and has contracted more than $2 trillion, implying a drop of 9.5 percent year over year.

The report underscores how idiosyncrasies of the COVID-19 pandemic have led to unusual fluctuations in consumption and investment that could continue over time. Personal consumption expenditures dropped by more than 34 percent in the second quarter. While the consumption of both goods and services dropped, consumption of motor vehicles and recreational equipment actually increased. Purchases of household furnishings fell by more than 10 percent, while consumption of clothing and footwear dropped to levels not seen since 2009.

Growth for the first half of 2020 has been exactly in line with the economic outlook published by BBVA Research in April, and the team is maintaining its expectations for growth in 2020 of -5.1 percent. However, recent spikes in the number of Covid-19 in hotspots around the country and the resulting shift to more cautious behavioral responses suggest that the risks are firmly tilted to the downside, according to the report. 

Led by Nathaniel Karp, BBVA USA's research team analyzes the U.S. economy and Federal Reserve monetary policy. For its analyses, the economists create models and forecasts for growth, inflation, monetary policy and industries. The Economic Research team also follows a variety of issues that affect the Sunbelt states where BBVA USA operates. Follow their work on Twitter @BBVAResearch and @BBVANews_USA.

Read the full analysis here.

See the complete library of BBVA Research publications here.

For more BBVA news visit, www.bbva.com and the U.S. Newsroom.

Additional news updates can be found via Twitter and Instagram.

For more financial information about BBVA in the U.S., visit bbvausa.investorroom.com.

About BBVA

BBVA Group
BBVA (NYSE: BBVA) is a customer-centric global financial services group founded in 1857. The Group has a strong leadership position in the Spanish market, is the largest financial institution in Mexico, it has leading franchises in South America and the Sunbelt Region of the United States. It is also the leading shareholder in Turkey's Garanti BBVA. Its purpose is to bring the age of opportunities to everyone, based on our customers' real needs: provide the best solutions, helping them make the best financial decisions, through an easy and convenient experience. The institution rests in solid values: Customer comes first, we think big and we are one team. Its responsible banking model aspires to achieve a more inclusive and sustainable society.

BBVA USA
In the U.S., BBVA is a Sunbelt-based financial institution that operates 641 branches, including 330 in Texas, 89 in Alabama, 63 in Arizona, 61 in California, 44 in Florida, 37 in Colorado and 17 in New Mexico. The bank ranks among the top 25 largest U.S. commercial banks based on deposit market share and ranks among the largest banks in Alabama (2nd), Texas (4th) and Arizona (6th). In the U.S., BBVA has been recognized as one of the leading small business lenders by the Small Business Administration (SBA) and ranked 8th nationally in terms of dollar volume of SBA loans originated in fiscal year 2018.

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SOURCE BBVA USA

FAQ

What does BBVA Research's economic analysis reveal about Q2 2020 GDP?

BBVA Research indicates a historic GDP decline of 32.9% in Q2 2020, the largest drop since 1937.

How much has the U.S. GDP contracted in financial terms according to BBVA?

The U.S. GDP has contracted by over $2 trillion, reflecting a 9.5% decline year over year.

What are the concerns highlighted by BBVA regarding the U.S. economy?

BBVA cites rising COVID-19 cases as a significant risk that could negatively impact economic growth.

What was the personal consumption expenditure change in Q2 2020 according to BBVA?

Personal consumption expenditures fell by more than 34% in Q2 2020, with specific declines in clothing and household furnishings.

What growth forecast does BBVA Research maintain for 2020?

BBVA maintains a growth forecast of -5.1% for the year 2020 despite severe economic impacts.