Coronavirus savages US economy in first quarter; bigger hit still to come

The US economy contracted in the first quarter at its sharpest pace since the Great Recession as stringent measures to slow the spread of the novel coronavirus almost shut down the country, ending the longest expansion in the nation’s history.

The Commerce Department said gross domestic product fell at a 4.8 percent annualized rate in the January-to-March period after expanding at 2.1 percent in the final three months of 2019.

Economists in a Reuters poll had been looking for a GDP contraction of 4 percent, although estimates ranged to as low as negative 15 percent.

The decline reflected a plunge in economic activity in the last two weeks of March, which saw millions of Americans seeking unemployment benefits. The snapshot will reinforce analysts’ predictions that the economy was already in a deep recession.

Most of the key components of US economic output — including consumer spending, which accounts for two-thirds of economic activity — fell sharply.

“The economy is in free fall, we could be approaching something much worse than a deep recession,” said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles. “It’s premature to talk about a recovery.”