The US economy shrank in the first quarter by its fastest rate since the 2008 financial crisis, ending the longest expansion on record as lockdowns aimed at curbing the coronavirus pandemic choked off economic activity.
Gross domestic product, or the value of all goods and services produced by the economy, shrank at an 4.8 per cent annualised rate in the first three months of the year, according to the preliminary estimate from the Bureau of Economic Analysis published on Wednesday. That marked the steepest drop since the 8.4 per cent contraction at the end of 2008 and compared with economists’ forecasts for a narrower 4 per cent decline in output.
In a rare statement, the BEA attributed the economic damage to “stay-at-home” orders issued in March, which “led to rapid changes in demand, as businesses and schools switched to remote work or cancelled operations, and consumers cancelled, restricted, or redirected their spending”.