BUSINESS

U.S. economy shrinks 4.8% in Q1, fall sharpest since 2009

GDP estimated to plunge at 40% annual rate in April-June

The U.S. economy shrank at a 4.8% annual rate last quarter as the COVID-19 pandemic shut down much of the country and began triggering a recession that will end the longest expansion on record.

The Commerce Department said the gross domestic product (GDP), the total output of goods and services, posted a quarterly drop for the first time in six years.

And, it was the sharpest fall since the economy shrank at an 8.4% annual rate in the fourth quarter of 2008 in the depths of the Great Recession.

Forecasters said the drop in the January-March quarter will be only a precursor of a far grimmer GDP report to come for the April-June period, with business shutdowns and layoffs striking with devastating force.

The Congressional Budget Office has estimated that GDP will plunge this quarter at a 40% annual rate.

That would be, by a breathtaking margin, the bleakest quarter since such records were first compiled in 1947. It would be four times the size of the worst quarterly contraction set in 1958. In just a few weeks, businesses across the country have shut down and laid off tens of millions of workers.

As the economy slides into what looks like a severe recession, some economists are holding out hope that a recovery will arrive quickly and robustly once the health crisis has been solved. Increasingly, though, analysts say they think the economy will struggle to regain its momentum even after the viral outbreak has subsided.

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