The U.S. economy shrank 4.8% in the first quarter of 2020, ending a record streak of expansion, according to a preliminary estimate released by the Commerce Department on Wednesday.
The real gross domestic product (GDP) is among the first economic indicators to show the impact of the novel coronavirus pandemic on the U.S. economy.
In the fourth quarter of 2019, real GDP increased 2.1%.
The government attributed the decline in the first quarter partly to “stay-at-home” orders issued by governors in March.
“This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending,” the government said.
Economists were expecting a decline in GDP of about 3.5% to 4%. This is the first negative GDP since the 1.1% decline in Q1 of 2014 and the largest decline since the recession in Q4 of 2008 when GDP dropped 8.4%.
The COVID-19 pandemic has brought huge swaths of the economy to a screeching halt.
Non-essential businesses have been forced to shutter, and some 26 million people have lost their jobs and filed for unemployment amid the crisis, according to the Department of Labor.
In just over a month, the pandemic wiped out all the job gains since the 2009 recession.
Earlier this month, the International Monetary Fund released its 2020 World Economic Outlook, projecting the global economy will contract by 3% as a result of the COVID-19 pandemic, a steeper decline than the 2008-2009 financial crisis.
The group forecast that the cumulative loss to the global GDP from 2020 to 2021 as a result of the pandemic could be approximately $9 trillion, or more than the economies of Japan and Germany combined.
Gita Gopinath, the economic counsellor and director of research at the IMF, referred to the contraction as “the Great Lockdown” in a blogpost, saying it will be “the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”
“This is a truly global crisis as no country is spared,” Gopinath wrote. “Countries reliant on tourism, travel, hospitality, and entertainment for their growth are experiencing particularly large disruptions.”