The United States’ GDP shrank at “an even faster pace than initially estimated” in the first quarter of 2020, CNBC reported Thursday, suggesting that coronavirus-related lockdowns had a more marked effect on the economy than many in the government anticipated.
There is at least one good sign, however: continuing unemployment claims dropped for the first time since reaching their peak in late March when more than 20 million individuals filed initial unemployment claims in the first round of coronavirus layoffs and furloughs.
“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,” CNBC said Thursday. “It was the biggest quarterly decline since an 8.4% fall in the fourth quarter of 2008 during the depths of the financial crisis.”
The 5% decline is greater than market analysts expected, which could mean that second-quarter results, which cover April through June of 2020 — the height of the coronavirus pandemic and the associated lockdowns — will be worse than expected as well. CNBC says the decline could be as much as 40%, the single largest drop since the Congressional Budget Office began compiling records on economic progress in 1947,
The decline in continuing unemployment applications, though, does give analysts some hope that coronavirus’ economic damage can be contained and that the worst may be over. The Daily Caller said Thursday that “3 million people who had previously filed unemployment claims during the pandemic — and continued receiving benefits for more than one weekly period — have re-entered the workforce as multiple states, including Georgia, Florida, and Texas, have all begun the reopening process.”
May was a difficult month for most businesses, per the Fed’s monthly economic report, which says that the United States saw “a deep, nationwide plunge in consumer spending, manufacturing activity, travel and construction due to disruptions driven by the pandemic, sending shockwaves through the energy, real estate, auto, aerospace and agricultural industries.”
In May alone, Yahoo Finance reports, “some 27 companies reporting at least $50 million in liabilities sought court protection from creditors — the highest number since the Great Recession. They range from well-known U.S. mainstays such as J.C. Penney Co. and J. Crew Group Inc. to air carriers Latam Airlines Group SA and Avianca Holdings, their business decimated as travelers stayed put.”
Experts are hopeful, though, that the declarations and bankruptcies are the end result of the lockdowns and represent financial conclusions, not the start of a trend. Forthcoming progress may not be enough for the country to fully recover from the economic devastation wrought by COVID-19, but there may at least be some forthcoming, slow, upward movement for businesses.
The White House is planning to add to that hope, rolling out an “economic opportunity” plan focused on returning specific industries to work as quickly as possible.
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