US economy contracts 4% in first quarter

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.