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Graphic shows U.S. GDP changes since 2008-09 recession.
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By Duncan Mil

April 30, 2020 - Devastated by the coronavirus, U.S. gross domestic product shrank at an annual rate of 4.8% in the January-March quarter. GDP is the broadest measure of goods and services produced by the economy.

Things will get much worse. Widespread layoffs and business closures did not happen until the very end of the first quarter -- since March 21 when the U.S. went into lockdown more than 26.5 million people have lost their jobs. The Congressional Budget Office has estimated that economic activity will plunge at a 40% annual rate in the April to June quarter.

The government’s GDP report showed the first quarterly drop in six years. And it is the sharpest fall since the economy shrank at an 8.4% annual rate in the fourth quarter of 2008 -- in the depths of the “Great Recession” triggered by the global financial crisis.

The report showed that plummeting consumer spending, which accounts for 70% of economic activity, drove the fall.

As the economy staggers towards a potential recession, the Trump administration continues to claim that a recovery will arrive quickly once the health crisis ends. Steven Mnuchin, the Treasury secretary, said this week that he expected the economy to “really bounce back” this summer as states lift stay-at-home orders -- what some call a V-shaped recovery.

The Congressional Budget Office last week released projections that the economy would begin growing again in the second half of the year, but that the GDP would not return to its pre-pandemic level until 2022 at the earliest.

Sources
PUBLISHED: 30/04/2020; STORY: Graphic News
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