United States GDP Fell 4.8% in the First Quarter Of 2020
As per the document released by the government members on Wednesday, the gross domestic product (GDP) of the United States fell 4.8% in the first quarter as the coronavirus has hit the US economy tremendously hard.
This also has been the first negative GDP growth since April 14 when there was a 1.1% decline which is also the worst decline since the 8.4% fall during the global financial crisis in 2008.
The largest sectors that have been dragging the economy towards these conditions are non-residential fixed investments, consumer spending, inventories, and exports. It must be noted that residential fixed investments have jumped 21% due to the stimulus by both federal and state governments and this has helped offset some of the damage.
Apart from this, consumer expenditures that comprise over 67% of the GDP fell 7.6%. While durable goods spending stumbled 16.1% and other expenditures on services were down by 10.2%.
The same story was for exports and imports as world trade is completely on a standstill. Exports dropped 8.7% and the imports dropped to a level of 15.3%.
It must also be noted that the first quarter saw only 2 months of lockdown, the main results of lockdown will show up in the following quarter provided the lockdown does not lift in the entire quarter. The growth rate of GDP is projected to be even worse in the upcoming quarter in that case.
“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. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified,” As per The Bureau of Economic Analysis
This was a highly likely scenario and it did not take the market to the surprise as Wall Street did not show any reaction to these numbers.