US Economy Shrank 4.8% In First Quarter, Sharpest Drop Since Great Recession

Dan Labernik, owner of Labby's Grill and Bar in Fargo, N.D., is seen on Tuesday, April 28, 2020. The establishment has been closed to customers for six weeks after North Dakota Gov. Doug Burgum put restaurants and ba... Dan Labernik, owner of Labby's Grill and Bar in Fargo, N.D., is seen on Tuesday, April 28, 2020. The establishment has been closed to customers for six weeks after North Dakota Gov. Doug Burgum put restaurants and bars on his list of business closings because of the coronavirus. Labernik is doing prep work to resume business but said reopening the grill and bar will depend on guidelines that Burgum is putting together and whether it makes financial sense. (AP Photo/Dave Kolpack) MORE LESS
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WASHINGTON (AP) — The U.S. economy shrank at a 4.8% annual rate last quarter as the coronavirus pandemic shut down much of the country and began triggering a recession that will end the longest expansion on record.

The Commerce Department says the gross domestic product, the total output of goods and services, posted a quarterly drop for the first time in six years. And it was the sharpest fall since the economy shrank at an 8.4% annual rate in the fourth quarter of 2008 in the depths of the Great Recession.

Forecasters say the drop in the January-March quarter will be only a precursor of a far grimmer GDP report to come on the current April-June period, with business shutdowns and layoffs striking with devastating force. The Congressional Budget Office has estimated that GDP will plunge this quarter at a 40% annual rate.

That would be, by a breathtaking margin, the bleakest quarter since such records were first compiled in 1947. It would be four times the size of the worst quarterly contraction on record set in 1958.

In just a few weeks, businesses across the country have shut down and laid off tens of millions of workers. Factories and stores are shuttered. Home sales are falling. Households are slashing spending. Consumer confidence is sinking.

As the economy slides into what looks like a severe recession, some economists are holding out hope that a recovery will arrive quickly and robustly once the health crisis has been solved — what some call a V-shaped recovery. Increasingly, though, analysts say they think the economy will struggle to regain its momentum even after the viral outbreak has subsided.

Many Americans, they suggest, could remain too fearful to travel, shop at stores or visit restaurants or movie theaters anywhere near as much as they used to. In addition, local and state officials may continue to limit, for health reasons, how many people may congregate in such places at any one time, thereby making it difficult for many businesses to survive. It’s why some economists say the damage from the downturn could persist far longer than some may assume.

There is also fear that the coronavirus could flare up again after the economy is re-opened, forcing reopened businesses to shut down again.

The Trump administration takes a rosier view. President Donald Trump told reporters this week that he expects a “big rise” in GDP in the third quarter, followed by an “incredible fourth quarter, and you’re going to have an incredible next year.”

The president is building his re-election campaign on the argument that he built a powerful economy over the past three years and can do so again after the health crisis has been resolved.

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Notable Replies

  1. C’mon, Grandma! Take one for the team!

  2. Avatar for pine pine says:

    “The coronavirus pandemic is likely to trigger the sharpest recession in the United States since the Great Depression. An early signal of that came Wednesday, when the Commerce Department said the economy shrank at a 4.8% annual rate in the first three months of the year — the first quarterly contraction since 2014 and the largest since the Great Recession.”

    We are living in historic times.

  3. He didn’t build the economy. He rode Obama’s coattails and Wall Street ignored the crazy shit he did because they thought he was ‘pro-business’ and wouldn’t hurt them in the long run.

  4. Yes, my husband and I were talking about this. He said he’s read some real doomsday scenarios about the economy that would keep me up nights if I asked him to be too specific.

    It’s hard to believe the damage Trump and his crew have achieved in almost four short years.

  5. Avatar for tao tao says:

    He’s lying. Since he has accomplished less than nothing in his first term he will continue the flat out lie that he, and only he can bring back the rainbow farting unicorns of prosperity and good health. The reality is he will continue his acts of politcide against the American people as he funnels the taxpayers’ wealth to his family and political donors. The monster is not in the least concerned about the thousands of people who will die from his actions.

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