The United States’ Commerce Department says the world’s largest economy contracted by 4% in the first quarter of 2020 – its sharpest pace since the Great Recession that started in late 2007. This comes amid the coronavirus restrictions.
The Commerce Department indicated Gross Domestic Product fell at a 4.8% annualized rate in the January-to-March period after expanding at a 2.1% rate in the final three months of 2019.
The decline reflected a plunge in economic activity in the last two weeks of March, which saw at least 26 million Americans seeking unemployment benefits for the first time.
The snapshot reinforces predictions that the economy was already in a deep recession. Most of the key components of US economic output, including consumer spending, which accounts for two-thirds of economic activity, fell sharply.
Many factories and nonessential businesses were closed or operated below capacity amid nationwide lockdowns to control the spread of COVID-19.
Last week, President Donald Trump said that his administration was close to completing a plan to re-open the US economy, which has been largely shut down to slow the spread of the novel coronavirus.
State governors, meanwhile, appeared to be discussing plans to resume economic activity without seeking input from the Trump administration.
Nine states on the US East and West coasts said last week that they had begun planning for the slow reopening of their economies and lifting of strict stay-at-home orders.
The virus has killed close to 60 000 people in the United States and shut down all but essential travel and businesses.
Pressed on the question of whether governors or the federal government would make the decision to re-open schools and closed businesses, the president said that he had ultimate authority.
“The president of the United States calls the shots,” Trump said. “That being said, we’re going to work with the states.”