U.S. GDP Falls 4.8% In First Quarter Amid Coronavirus Pandemic, Worst Drop Since 2008
America’s first-quarter GDP fell at a 4.8% annualized rate, the U.S. Bureau of Economic Analysis reported Wednesday — and the economic downturn will not reverse course for several years, experts say.
The BEA noted that “the full economic effects of the Covid-19 pandemic cannot be quantified in the GDP estimate,” but the GDP report, along with the fact that 26.5 million Americans have filed for unemployment since mid-March, indicates that a bright economic future is in the distance.
The drop was the first contraction of the economy since the first quarter of 2014, and the worst decline since the last quarter of 2008, during the financial crisis.
The stay-at-home orders caused by the coronavirus outbreak led to consumer spending to drop at a 7.6% annualized rate, the sharpest drop in consumer spending since the second quarter of 1980.
Even when the economy reopens, consumers may not immediately return to their spending habits, as crowded venues like restaurants and theatres may pose a health risk.
House Speaker Nancy Pelosi (D-California) said the GDP report shows that social distancing protocol should remain in effect.
“The polls show that the American people are wiser than anyone, overwhelmingly, six-to-one, seven-to-one, they say that we should not go out there any sooner than ready and that we should not end the social distancing because of the risk involved to their health,” she told CNBC.
“We operate in three categories,” she continued. “One, the lives of the American people. Two, the livelihood of the American people. Not in any particular order but the lives come first. And then, third, the life of our democracy. So as we go forward all of these are connected … and the people’s will to say ‘I’m not going, I don’t wanna go out there until I feel some confidence.’ Because if you go out there, you bring home what you bring back to your family and your children.”
“This is a moment of truth for our country.” House Speaker Nancy Pelosi says there are “many disparities,” from tech to testing, that need to be addressed. https://t.co/8Dfiytjqkt pic.twitter.com/eaq2514RJV
— CNBC (@CNBC) April 29, 2020
White House spokesman Judd Deere called the report “not surprising,” but emphasized President Donald Trump‘s efforts to support the economy, including signing the trillion-dollar stimulus package into law.
“The GDP numbers today show difficulty and hardship but are not surprising as Americans continue to help slow the spread of this unforeseen virus,” Deere told Fox Business. “Every action President Trump has taken throughout this pandemic has been to ensure we emerge healthy, stronger and with a growing, prosperous economy. The president’s bold policies of low taxes, deregulation, reciprocal trade and energy independence took this economy to record-setting historic highs, and they will do so again as the president has placed us on a responsible path to reopen soon.”