GDP contraction likely to get worse
Experts say rebound to come in second half
WASHINGTON — The U.S. economy shrank at a 5 percent rate in the first quarter, and a worse performance is expected in the current threemonth period, when the coronavirus pandemic began to spread across the U.S.
The Commerce Department reported Thursday that the decline in the gross domestic product, the total output of goods and services, in the January-march quarter was unchanged from the estimate made a month ago.
It was the sharpest quarterly decline since an 8.4 percent tumble in the fourth quarter of 2008 during the depths of the worst financial crisis since the Great Depression.
The first-quarter period captured two weeks of the shutdowns that began in many parts of the country in mid-march.
Economists believe that GDP has plunged around 30 percent from April through the end of this month.
That would be the biggest quarterly decline on record by a long shot: three times bigger than a 10 percent drop in the first quarter of 1958.
Forecasters believe the economy will rebound in the second half of the year. The Congressional Budget Office
is predicting a 21.5 percent growth rate in the upcoming July-september quarter followed by a 10.4 percent gain in the fourth quarter.
But a handful of states, particularly in the South, have begun to report surging infections. And even
if a rebound materializes in July, it will follow seismic losses that would mean a decline in economic output for the entire year.
While overall GDP was unchanged for the first quarter, the composition shifted slightly with downward revisions to consumer spending, exports and business inventories offset by an upward revision to business investment.
The Thursday report was the government’s third and final look at first-quarter GDP.
The panel of economists that determines when U.S. recessions begin said that February marked the end of the longest economic expansion in U.S. history, 128 months of uninterrupted growth that began in the wake of the 2008 financial crisis.