US Politics

US Economy Falls by 4.8 Percent, Biggest Drop Since Great Recession

The CCP virus outbreak has plunged the U.S. economy into its most severe quarterly contraction since the Great Recession, with the Commerce Department on Wednesday announcing that first-quarter output fell by 4.8 percent.

The Departments seasonally adjusted, annualized quarter-on-quarter GDP number, typically abbreviated to SAAR QoQ, is an advance estimate and is subject to revision.

The dismal GDP number for the January-to-March period of 2020 comes after the economy grew at a 2.1 percent rate in the last three months of 2019. Most of the key components of U.S. economic output—including consumer spending, which accounts for two-thirds of economic activity—fell sharply amid widespread business shutdowns aimed to stem the spread of the virus.

“The economy is in free fall, we could be approaching something much worse than a deep recession,” said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles. “Its premature to talk about a recovery at this moment, we are going to be seeing a lot of bankruptcies for small and medium-sized businesses.”

Businesses along Fillmore Street
Businesses along Fillmore Street Businesses along Fillmore Street are seen boarded up in San Francisco, Calif., on April 8, 2020. (Justin Sullivan/Getty Images)

The Commerce Department partly blamed the pandemic for the dramatic plunge in output.

“The decline in first quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued stay-at-home orders in March,” the agency said in a note. “This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending.”

The agency noted that the first-quarter GDP number does not fully reflect the full economic impact of the pandemic because the agencys calculation methods and sources didnt completely capture the changes in economic activity that took place at the end of the quarter.

An employee prepares a take away order
An employee prepares a take away order An employee prepares a take away order at a fast food restaurant as the spread of the CCP virus affected local business in Roanoke, Va., on April 18, 2020. (Carlos Barria/Reuters)

While the 4.8 percent contraction in first-quarter GDP is the steepest since 2009, it is the years second-quarter output that is expected to bear the brunt of the outbreak-driven economic fallout.

White House economic adviser Kevin Hassett said on Monday the U.S. economy could experience its biggest slump since the Great Depression, predicting a second-quarter contraction in output of up to 30 percent.

“Youre looking at something like minus 20 percent to minus 30 percent in the second quarter,” Hasset said on CNBCs “Squawk Box.”

“For second-quarter GDP, its going to be the biggest negative number that weve seen since the Great Depression,” he added.

Unemployment has surged in the country, with more than 26 million jobs lost in the past five weeks alone, driven by the lockdowns imposed to mitigate the outbreak of the CCP (Chinese Communist PartyRead More From Source

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The Epoch Times

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