The Epoch Times ‘The decline in first-quarter GDP was, in part, due to the response to the spread of COVID-19,’ the Commerce Department said
The CCP virus outbreak has plunged the U.S. economy into its most severe quarterly contraction since the Great Recession, with the Commerce Department on April 29 announcing that first-quarter output fell by an annualized rate of 4.8 percent.
The departmentâs seasonally adjusted, annualized quarter-on-quarter gross domestic product (GDP) number, typically abbreviated to SAAR QoQ, is an advance estimate and is subject to revision.
The dismal GDP number for the January-to-March period of 2020 comes after the economy grew at a 2.1 percent rate in the last three months of 2019. Most of the key components of U.S. economic outputâincluding consumer spending, which accounts for two-thirds of economic activityâfell sharply amid widespread business shutdowns aimed at stemming the spread of the virus.
âThe economy is in freefall, we could be approaching something much worse than a deep recession,â said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles. âItâs premature to talk about a recovery at this moment. We are going to be seeing a lot of bankruptcies for small and medium-sized businesses.â
The Commerce Department partly blamed the pandemic for the dramatic plunge in output.
âThe decline in first-quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued âstay-at-homeâ orders in March,â the department said in a note. âThis led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending.â
The department noted that the first-quarter GDP number doesnât fully reflect the full economic impact of the pandemic because its calculation methods and sources didnât completely capture the changes in economic activity that took place at the end of the quarter.
