Corona crisis: US economy contracted sharply at the beginning of the year

The US economy shrank sharply at the beginning of the year due to the corona crisis. Economic output in the first quarter was 4.8 percent below the level of the previous quarter. The Ministry of Commerce announced this. Analysts had expected an average decrease of four percent.

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In the fourth quarter of 2019, the world’s largest economy grew by a solid 2.1 percent. However, experts are now warning that the USA is threatened by the greatest slump in growth since the Great Depression almost a hundred years ago.

Unemployment rate estimated at 15 percent

The coronavirus pandemic had intensified in the United States from March. From mid-March, many states began to impose exit restrictions that were devastating for the economy. Since then, more than 26 million people have lost their jobs in the United States. Experts believe that the unemployment rate should now be around 15 percent. The government fears an even more drastic economic downturn in the second quarter – possibly even a shrinkage of up to 30 percent.

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The data was the first estimate of economic growth, so the value could still be corrected in late May or late June.

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In the United States, growth figures are extrapolated over the year. They indicate how the economy would develop if the pace continued for a year. This annualization is dispensed with in Europe, which is why growth data from the two major economic areas are not directly comparable with one another.

Trump is counting on rapid recovery

Individual U.S. states are already beginning to relax corona restrictions. US President Donald Trump therefore hopes that the economy will recover quickly in the third and fourth quarters. However, most analysts expect a severe recession in 2020 – which Trump is unlikely to experience in the election year. He tries to get a second term in November.

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The U.S. Congress and government have already launched $ 2.7 trillion stimulus packages to curb the rise in unemployment and the slump in the economy due to the pandemic. The US Federal Reserve (Fed), in turn, has already lowered its key interest rate to almost zero and launched emergency programs worth several trillion dollars to stabilize the financial markets and the economy. Central bank chief Jerome Powell wanted to comment on the economic situation at 8:30 p.m. CEST after a meeting of the money market committee.

According to data from the University of Johns Hopkins, around one million people in the United States have been infected with the novel coronavirus Sars-CoV-2. More than 58,000 people have died.

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