The Bureau of Economic Analysis released the advance print of U.S. first-quarter gross domestic product Wednesday morning.
U.S. gross domestic product turned negative for the first time since 2014 in the first three months of the year as the coronavirus pandemic broadened out across the globe and the country in March, dragging output to a near standstill and driving a deep contraction in consumer spending.
Estimates for the size of the first-quarter contraction spanned a wide range, as economists grappled to assess the extent of the damage caused by an unprecedented set of business operational halts and widespread stay-in-place orders.“The decline in first quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued ‘stay-at-home’ orders in March,” the BEA said in a statement.
Services consumption shrank 10.2% in the first quarter over the prior period, the deepest contraction on record. Household consumption for services deducted 5.61 percentage points to headline GDP. A historic 26 million individuals filed for new unemployment insurance claims over the past five weeks, with new claims appearing to have peaked in late March. Retail sales plunged by a record 8.7% in March, suggesting a sharp drop-off in discretionary spending as social distancing measures overtook the country. Consumer spending comprises about 70% of U.S. economic activity.
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