The US economy shrank at a 4.8% annual rate last quarter as the coronavirus pandemic shut down much of the country and began triggering a recession that will end the longest economic expansion on record. The Commerce Department says the gross domestic product, the total output of goods and services, posted a quarterly drop for the first time in six years, per the AP. And it was 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. Forecasters say the drop in the January-March quarter will be only a precursor of a far grimmer GDP report to come on the current April-June period, with business shutdowns and layoffs of tens of millions of workers striking with devastating force. The Congressional Budget Office has estimated that GDP will plunge this quarter at a 40% annual rate.
That would be, by a breathtaking margin, the bleakest quarter since such records were first compiled in 1947. It would be four times the size of the worst quarterly contraction on record set in 1958. As the economy slides into what looks like a severe recession, some economists are holding out hope that a recovery will arrive quickly and robustly once the health crisis has been solved. Increasingly, though, analysts say they think the economy will struggle to regain its momentum even after the viral outbreak has subsided. There's also fear that the virus could flare up again after the economy is reopened, forcing reopened businesses to shut down again. The Trump administration takes a rosier view. President Trump told reporters this week that he expects a "big rise" in GDP in the third quarter, followed by an "incredible fourth quarter, and you're going to have an incredible next year."
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