Amid the fallout from the COVID-19 crisis, the U.S. economy contracted 4.8% during the first quarter of 2020, which is the biggest decline since the Great Recession, according to The Washington Post.
The Commerce Department report shows spending by Americans fell 7.6%, and business investment shrank 8.6%. Although Americans have been spending at grocery stores to get food and supplies, it was not nearly enough to offset lost spending on dining out, car sales, entertainment and more.
Analysts say the worst is yet to come, and the second quarter is likely to show a decline of more than 30%—a level not seen since the Great Depression.
“There’s really no question about it,” said economist Alicia Modestino, associate director of the Dukakis Center for Urban and Regional Policy. “We are in a recession, and it’s going to be a sharp recession.”
An official recession occurs when the economy experiences two consecutive quarters of negative growth. A depression is a sustained period of contraction and job loss that lasts for several years. The Trump administration is hopeful the government’s historic levels of aid can avert a depression; the federal government has approved more than $2 trillion in aid for people out of work and to help businesses survive.
However, economists say more spending will be needed. More than 26 million Americans already have lost their jobs and had to seek unemployment aid, and many businesses are on the verge of going bankrupt because they cannot sustain weeks without customers or revenue.
