The contraction of the United States economy due to the pandemic was worse than estimated

The Contraction Of The United States Economy Due To The Pandemic Was Worse Than Estimated

Washington – The contraction of the United States economy in the first three months of the year was worse than anticipated due to the COVID-19 pandemic and experts forecast an even steeper decline in the current quarter.

Gross domestic product contracted at an annual rate of 5% in the January-March quarter, slightly above the 4.8% drop calculated by experts last month, the Commerce Department reported Thursday.

The new figure is the strongest contraction in the US economy since the 8.4% suffered in the fourth quarter of 2008, amid the global financial crisis.

RELATED

The contraction is due to lower investment by companies in their inventories, although this was partially offset by a slight growth in consumer spending.

Economists estimate that business closings and subsequent layoffs will cause a 40% contraction in GDP in the current period, the deepest decline in the US economy since the account began in 1947 and four times the size of the worst previous contraction, recorded in 1958.

Some analysts believe that growth will rebound in the July-September period with the possibility of an annualized expansion of 21.5% of GDP. Even so, this would not be enough to compensate for the losses suffered in the initial two periods of the year.

In addition, there are those who conjecture that the economic recovery predicted for the second half of the year does not even occur if measures to reopen the economy fail. If the quarantine removal triggers a second wave of coronavirus infections, this would frustrate efforts to attract people back to shops and restaurants.

READ MORE NEWS

YOU MAY ALSO LIKE