US economy contracts by 5 pct. in 1st quarter, final reading shows
Washington, Jun 25 (efe-epa).- The United States’ economy contracted by 5 percent in the first quarter of 2020 – the biggest drop in output since the Great Recession – due to the impact of the coronavirus-triggered lockdowns on consumer spending, exports and non-residential fixed investment.
The Commerce Department’s third and final reading of gross domestic product for the January to March period, published Thursday, was unchanged from the second estimate.
The “advance” estimate, released in late April, showed that US GDP fell by 4.8 percent compared to the preceding quarter.
The latest report confirms that the US sustained its biggest quarterly drop in economic output since an 8.4 percent contraction in the fourth quarter of 2008.
Although the first-quarter figure partially reflects the impact of the lockdowns, economists are forecasting a much bigger contraction of around 30 percent in the second quarter.
States imposed strict measures to contain the spread of the novel coronavirus in the US, where roughly 120,000 deaths are attributed to Covid-19.
Thousands of “non-essential” businesses were forced to severely curtail their operations as the unemployment rate soared to 14.7 percent in April, although it subsequently fell to 13.3 percent in May.
Weekly initial jobless claims, meanwhile, have exceeded the 1 million mark for the past 14 weeks.
In the week ending June 20, a total of 1.48 million initial claims were filed, down by 60,000 from the previous week’s revised level, the Labor Department said Thursday.
A record total of 6.9 million initial claims were filed in the week ending March 28 and 3.3 million in the week ending March 21 as states across the US ordered non-essential businesses to suspend their operations and imposed stay-at-home measures in a bid to encourage social distancing and contain the spread of Covid-19.
Hopes for a possible rebound in the second half of the year will depend on the evolution of the coronavirus in the US, with a possible wave of new confirmed cases looming as a threat to the economic recovery because they might trigger new lockdowns.
The International Monetary Fund has become more gloomy about the prospects for the US economy this year, forecasting an 8 percent contraction in GDP on Wednesday after projecting a 6.1 percent drop just three months ago.
That multilateral institution said it expects the US economy will grow 4.8 percent in 2021, a promising bounceback but still insufficient for a full economic recovery.
The US leads the world with 2.3 million confirmed coronavirus cases, although the Centers for Disease Control and Prevention on Thursday said the real number of Americans infected is probably around 20 million, or 6 percent of the population.
The CDC based that finding on studies of blood samples collected nationwide. EFE-EPA