US economy shrank at 5% annual rate in Q1
Source: Associated Press
US economy shrank at 5% annual rate in Q1
By MARTIN CRUTSINGER
2 hours ago
WASHINGTON (AP) -- The U.S. economy shrank at an even faster pace than initially estimated in the first three months of this year with economists continuing to expect a far worse outcome in the current April-June quarter.
The Commerce Department reported Thursday that the gross domestic product, the broadest measure of economic health, fell at an annual rate of 5% in the first quarter, a bigger decline than the 4.8% drop first estimated a month ago.
It was the biggest quarterly decline in more than a decade, since an 8.4% fall in the fourth quarter of 2008 during the depths of the financial crisis.
The downward revision to first quarter GDP reflected weaker investment by businesses in their inventories which was partially offset by slightly stronger consumer spending.
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Read more: https://apnews.com/9319aef1081cd987703afa4cbad2fd96
The Commerce Department reports that the U.S. gross domestic product, the broadest measure of economic health, fell at an annual rate of 5% in the first quarter, a bigger decline than the 4.8% drop first estimated a month ago.
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https://www.bea.gov/news/2020/gross-domestic-product-1st-quarter-2020-second-estimate-corporate-profits-1st-quarter
News Release BEA 20--23
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Thursday, May 28, 2020
Gross Domestic Product, 1st Quarter 2020 (Second Estimate); Corporate Profits, 1st Quarter 2020 (Preliminary Estimate)
Real gross domestic product (GDP) decreased at an annual rate of 5.0 percent in the first quarter of 2020 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.1 percent.
The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the decrease in real GDP was 4.8 percent. With the second estimate, a downward revision to private inventory investment was partly offset by upward revisions to personal consumption expenditures (PCE) and nonresidential fixed investment (see "Updates to GDP" on page 2).
Coronavirus (COVID-19) Impact on the First-Quarter 2020 GDP Estimate
The decline in first quarter GDP reflected the response to the spread of COVID-19, as governments issued "stay-at-home" orders 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 full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.
The decrease in real GDP in the first quarter reflected negative contributions from PCE, private inventory investment, nonresidential fixed investment, and exports that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).
The decrease in PCE reflected a decrease in services, led by health care as well as food services and accommodations. The decrease in private inventory investment was mainly in nondurable goods manufacturing, led by petroleum and coal products. The decrease in nonresidential fixed investment primarily reflected a decrease in equipment, led by transportation equipment. The decrease in exports primarily reflected a decrease in services, led by travel.
Real gross domestic income (GDI) decreased 4.2 percent in the first quarter, in contrast to an increase of 3.1 percent (revised) in the fourth quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 4.6 percent in the first quarter, in contrast to an increase of 2.6 percent in the fourth quarter (table 1).
Current‑dollar GDP decreased 3.5 percent, or $191.6 billion, in the first quarter to a level of $21.54 trillion. In the fourth quarter, GDP increased 3.5 percent, or $186.6 billion (tables 1 and 3).
The price index for gross domestic purchases increased 1.7 percent in the first quarter, compared with an increase of 1.4 percent in the fourth quarter (table 4). The PCE price index increased 1.3 percent, compared with an increase of 1.4 percent. Excluding food and energy prices, the PCE price index increased 1.6 percent, compared with an increase of 1.3 percent.
More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA's website.
Updates to GDP
In the second estimate, first-quarter real GDP decreased 5.0 percent from the fourth quarter, a downward revision of 0.2 percentage point. The revision primarily reflected a downward revision to private inventory investment that was partly offset by upward revisions to PCE and nonresidential fixed investment. For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section below.
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Get details about why the U.S. economy shrank in the first three months of 2020. Read our blog: https://go.usa.gov/xwYMp.
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The U.S. economy shrank at a 5.0% pace in Q1, more than the 4.8% rate of decline initially estimated a month ago. https://go.usa.gov/xUSSS
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roamer65
(36,739 posts)Like a recession - but much bigger, fatter, cheesier, and destructive.
Yavin4
(35,357 posts)Can we just admit that the markets are just a reflection of Fed policy and nothing more? All those billions paid in bonuses to "geniuses" on Wall Street is just a facade, just marketing to get people to believe in bullshit.
The markets are based on access to cheap money. That's all.
jimfields33
(15,471 posts)Big bargains out there. The stocks I bought three months ago are up big time. I hope those who can take advantage of this. Even if you cut and run, you can make some money right now.
greenjar_01
(6,477 posts)jimfields33
(15,471 posts)greenjar_01
(6,477 posts)jimfields33
(15,471 posts)We are discussing the stock market. I added what I do in case someone may want to do the same. I dont see a single thing wrong with it and for you to be pissed off over it is weird.
LanternWaste
(37,748 posts)No Shirt, No Shoes No Service was "was deeply ideological in some parts of the country" and that "No stores actually have those signs anymore..."
Any evidence at all?
Anything other than more allegations?
Steelrolled
(2,022 posts)to put money into stocks, as he had been thinking about it for several months. I normally am hesitant to give this kind of advice, but in this case I said "absolutely, you will never find a better time." I never followed up with him, but I suspect he didn't do it I would understand because it is very very hard to go against the crowd.
Edit to fix typo.
jimfields33
(15,471 posts)I just think its worth the risk right now. I watched the stock market fall hard and then bought.
Roc2020
(1,604 posts)a shadow connection between the financial markets and overall economy. No more. And most know it. The U.S is simply printing money and the markets are up only because of that printed money. <shrug>. Without economic growth that printed money mainly helps only a few and mainly banks.
Steelrolled
(2,022 posts)It feels less like a crisis, Europe continues to improve, and overall, the US is improving, even if it is not across-the-board.
bucolic_frolic
(42,676 posts)Is the population shrinking yet? Subtract that growth multiplier spending from any normal recession and rebound.
gab13by13
(20,865 posts)that 5% annual decline means that the economy is forecast to be -5% for the year not just the 1st quarter.
mahatmakanejeeves
(56,897 posts)"US economy shrank at 5% annual rate in Q1"
If the rate of change stays like this for an entire year, the economy will shrink 5% for the entire year.
smb
(3,453 posts)mahatmakanejeeves
(56,897 posts)bucolic_frolic
(42,676 posts)and the positive economic aspects - hoarding, home office computer buildout - are mostly non-recurring. So I suspect Q2 April May will be a real downer.
NewJeffCT
(56,827 posts)for essentially the last 3 weeks of Q1 being shut down. The first 10 weeks were pretty much normal.
Q2 will be 6-8-10 weeks of shut down before starting to ramp back up
LudwigPastorius
(8,944 posts)on those numbers at the Bureau of Economic Analysis.
The next quarter's numbers must be better, or else.
Can't have an official recession headed into the election.