Efforts to curb the spread of the coronavirus have also slowed the economy, with gross domestic product contracting 4.8% at a seasonally adjusted annualized rate in the first quarter, the Commerce Department reported Wednesday in a preliminary estimate.
The contraction was even steeper than economists had anticipated. Nevertheless, forecasters expect a far larger downturn in the second quarter, reflecting the full extent of the shuttering of businesses that took place across the country.
Economic output had been growing steadily before the pandemic struck. In the fourth quarter of 2019, GDP increased 2.1% at a seasonally annualized rate. For the entire year of 2019, GDP growth grew 2.3%.
Wednesday’s report marked the first time GDP has contracted since 2014, when it was negative 1.1% in the first quarter.
GDP projections for the second quarter show a steeper decline in activity than anticipated for the first quarter.
The Congressional Budget Office on Friday estimated that second-quarter activity will decline by 12%. White House economic adviser Kevin Hassett on Monday predicted that economic contraction in the second quarter would be extreme.
“You’re looking at something like minus 20% to minus 30% in the second quarter,” Hassett said, referring to an annualized rate. He said that it will be “the biggest negative number that we’ve seen since the Great Depression.”
