Economy April 29, 2020

Coronavirus Contraction: The U.S. Economy Shrank 4.8% Signaling Recession

NEW YORK, NY - APRIL 21: A store stands closed as the coronavirus keeps financial markets and businesses mostly closed on April 21, 2020 in New York City. New York City, which has been the hardest hit city in America from COVIT-19, is just starting to see a slowdown in hospital visits and a lowering of the daily death rate from the virus. (Photo by Spencer Platt/Getty Images)

The U.S. economy shrank 1.2% in the first quarter, which would be an annual decline of 4.8%. That’s a horrible number, but Vox writes, it’s probably worse.

“Indeed, because quarterly GDP statistics are calculated as changes in the average level of GDP across the three-month period, rapid changes at the end of the quarter in effect receive less weight than they would have had they happened at the beginning of the period. Consequently, the actual rate of economic decline once the decline set in was almost certainly much more rapid than the 4.8 percent number would suggest.“

Economists are in agreement that the second quarter results will see a much steeper decline in GDP.

NEW: Commerce Department data shows the economy shrank at its fastest pace since the Great Recession — and worse news is on the way. https://t.co/hVgLJoukns
— Vox (@voxdotcom) April 29, 2020

It was the biggest slide since 2008’s Great Recession and the effect of the virus have brought the longest economic expansion to an abrupt halt. NBC News writes:

“You’re looking at something like minus 20 percent to minus 30 percent in the second quarter,” White House economic adviser Kevin Hassett told CNBC on Monday, noting that the coronavirus is “the biggest shock since the Great Depression. It’s a very grave shock and it’s something we need to take seriously.”