US economy shrinks by 4.8% percent in Q1 2020, biggest decline since 2008

WASHINGTON — The coronavirus pandemic has dealt a devastating blow to the US economy as the country introduced lockdowns to slow the spread of the deadly virus.

The world's largest economy sank at an annual rate of 4.8 percent, according to official figures released on Wednesday.

It marked the first contraction since 2014, ending a record expansion.

Much of the US economy shut down in March in an effort to contain the virus, triggering 26 million people to file for unemployment benefits and wiping out a decade of jobs gains, at the end of the first quarter.

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 as figures do not reflect the full crisis, since many of the restrictions were not put in place until March.

The biggest drags on the economy were consumer spending, nonresidential fixed investment, exports and inventories. Residential fixed investment, which jumped 21 percent, along with spending from both the federal and state governments helped offset some of the damage. Federal spending was up 1.7 percent.

The contraction in the US economy is part of a global slowdown as a result of the coronavirus pandemic.

In China, where restrictions were in place for much of the quarter, the economy shrank by 6.8 percent — its first quarterly contraction since record-keeping began in 1992.

And on Wednesday, Germany said its economy could shrink by a record 6.3 percent this year.

"We will experience the worst recession in the history of the federal republic" founded in 1949, Economy Minister Peter Altmaier said. — Agencies