By Adedapo Adesanya
The gross domestic product (GDP) of the United States of America fell 4.8 percent in the first quarter of 2020 as the country’s longest run of economic expansion came to an abrupt end.
This was disclosed by a report published by the Bureau of Economic Analysis on Wednesday, April 29.
The slump from January through March reflects the sharp economic impact of country-wide shutdowns to curb the spread of COVID-19.
The Q1 GDP contraction has ended the longest-ever economic expansion that took place in the US after the Great Recession from 2007 to 2009.
During this period of record expansion, the unemployment rate fell to a 50-year low of 3.5 percent and the US economy added jobs for 113 months in a row.
In March, most of the US went into lockdown mode and as a result more than 25 million Americans have now filed for unemployment claims, effectively erasing more than a decade of job creation in just over a month.
In addition to this, industrial production has fallen, retail sales have declined at a record pace, and housing sales have slumped. Retail sales fell 8.7 percent in March, the most since records began in 1992.
Economists have cautioned that the worst is yet to come for the US economy.
To cushion the blow to the US economy, the US Congress passed a $2.2 trillion stimulus package that expanded unemployment benefits, and earmarked $349 billion to bailout small businesses and this was recently expanded by an additional $310 billion.
As the coronavirus continues, analysts project that second quarter GDP is expected to fall at an even sharper annualized rate. Economists expect major slumps ranging from 30 percent to 40 percent.
Recall that some days ago, the world’s second biggest economy, China, recorded a plunge in the first quarter of this year.
Business Post Contributor