As expected, the U.S. economy took a major hit in the first quarter (ended March 31) due to the coronavirus pandemic, according to the Commerce Department.
New data said the gross domestic product (GDP) decreased by an estimated 4.8% in the first quarter of 2020 — the biggest decline since the Great Recession in the fourth quarter of 2008. By comparison, the GDP increased by 2.1% in the fourth quarter (ended Dec. 31, 2019).
Industry experts had expected a 3.7% decline while pre-COVID-19 estimates called for a 2.1% increase. The second GDP estimate will be released on May 28.
The GDP drop was due to widespread shutdowns of all non-essential commerce in an effort to stop the spread of COVID-19 as state and local governments issued “shelter-in-place” mandates. The lockdowns flatlined most retail transactions with consumer spending canceled, restricted or redirected online.
“This is unprecedented in terms of what we typically see in a recession,” Robert Murphy, an economist at Boston College, told The Walt Street Journal. “When you go into a recession, it’s usually a gradual process, it doesn’t happen all at once.”