The U.S economy contracted at a 4.8% annualized rate during the first three months of the year, the Commerce Department estimated Wednesday. The decline — the worst since the 8.4% plunge in the fourth quarter of 2008 — reflects the extreme steps businesses and workers took in March to slow the spread of the coronavirus. Consumer spending saw its biggest drop since 1980, and business investment fell faster than it has in more than a decade.
The economic data is expected to be dramatically worse in the second quarter as job losses and business closings continue, likely producing the worst recession the country has seen since the Great Depression. The Congressional Budget Office is projecting a 12% decline in GDP in the current quarter.
“Despite massive government aid packages and near-zero interest rates, businesses big and small risk going bankrupt, while consumers may remain wary of hitting shops and restaurants amid health concerns, higher debt burdens and job insecurity,” Bloomberg’s Katia Dmitrieva wrote.