The coronavirus pandemic officially snapped the United States’ economic growth streak in the first three months of the year. The question now is how deep the damage will get — and how long the country will take to recover.
U.S. gross domestic product, the broadest measure of goods and services output, fell at a 4.8 percent annual rate in the first quarter of the year, the Commerce Department said Wednesday. That is the first decline since 2014, and the worst quarterly contraction since 2008, when the country was in a deep recession.
There is much worse to come. Widespread layoffs and business closings didn’t hit until late March in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully, to show that G.D.P. contracted at an annual rate of 30 percent or more, a scale not seen since the Great Depression.
“They’re going to be the worst in our lifetime,” Dan North, chief economist for the credit insurance company Euler Hermes North America, said of the second-quarter figures. “They’re going to be the worst in the post-World War II era.”
The Federal Reserve pledged Wednesday to use its full range of tools to mitigate the effects of the downturn and restore the economy to health. Jerome H. Powell, the Fed chair, said Congress, too, would most likely have to do more.
“The depth and the duration of the economic downturn are extraordinarily uncertain,” Mr. Powell said Wednesday. “It may well be the case that the economy will need more support from all of us if the recovery is going to be a robust one.”
Treasury Secretary Steven Mnuchin said this week that he expected the economy to “really bounce back” this summer as states lift stay-home orders and trillions of dollars in federal emergency spending reaches businesses and households. But most independent economists are much less optimistic. The Congressional Budget Office last week released projections indicating that the economy will begin growing again in the second half of the year but that the G.D.P. won’t return to its pre-pandemic level until 2022 at the earliest.
