The US economy suffered its fastest contraction since the Great Recession as the coronavirus crisis put the country under lockdown, new federal data show.
The nation’s gross domestic product — the value of all goods and services produced here — decreased by an annual rate of 4.8 percent in the first three months of the year, the US Department of Commerce said Wednesday.
That marks the sharpest quarterly drop since the fourth quarter of 2008, when GDP fell 8.4 percent, and reverses the economy’s 2.1 percent growth in the last quarter of 2019. Economists had predicted a 4 percent decline for the first quarter.
“The economy has fallen off a cliff and no one knows how far it is down to the bottom after the coronavirus shutdown of the nation caused the fastest collapse in economic activity in history,” said Chris Rupkey, chief financial economist at MUFG Union Bank.
The “stay-at-home” orders several states issued in March to stem the spread of the coronavirus appeared to wipe out any growth the economy saw before the pandemic arrived. Consumer expenditures plummeted 7.6 percent in the first quarter as Americans “canceled, restricted, or redirected their spending” because of those restrictions, according to the feds.
“Given that the full lockdowns continued through April and most states are likely to continue at least partial lockdowns through May, that leaves June as the only month in the second quarter that may see a possible return to normalcy,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance.
The steep decline is the latest sign of how deeply the unprecedented coronavirus crisis has gutted the national economy. More than 26 million Americans filed for unemployment benefits in five weeks as lockdowns led to mass layoffs, while retail sales plunged by a record 8.7 percent last month.
Wednesday’s figures put an end to nearly six full years of consecutive GDP growth for the US economy. The last contraction came in the first quarter of 2014, when GDP shrank 1.1 percent, federal data show.
With Post wires
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