WASHINGTON – The U.S. economy shrank at a 5.0% rate in the first quarter and a vastly worse performance is expected in the current three-month period, when the coronavirus pandemic began to spread across the U.S.
The Commerce Department reported Thursday that the decline in the gross domestic product, the total output of goods and services, in the January-March quarter was unchanged from the estimate made a month ago.
It was the sharpest quarterly decline since an 8.4% tumble in the fourth quarter of 2008 during the depths of the worst financial crisis since the Great Depression.
The first quarter period captured just two weeks of the shutdowns that began in many parts of the country in mid-March.
Economists believe that GDP has plunged around 30% from April through the end of this month.
That would be the biggest quarterly decline on record by a long shot: Three times bigger than a 10% drop in the first quarter of 1958.
Forecasters believe the economy will rebound in the second half of the year. The Congressional Budget Office is predicting a 21.5% growth rate in the upcoming July-September quarter followed by a 10.4% gain in the fourth quarter.
However, a handful of states, particularly in the South, have begun to report surging infections. And even if a rebound materializes in July, it will follow seismic losses that would mean a decline in economic output for the entire year.