The hard times in US economy
On Wednesday, the commerce department declared the economy dropped off about 4.8% in the first three months of 2020, and it is an end to the longest economic expansion in the US.
The collapse in the economy is the steepest one since the last hard times during 2008. It indicates how this novel coronavirus has hit the US economy severely.
A huge part of the US economy is closed in March because of the pandemic, and the shut down triggered 26 million of the US people to file for unemployment advantages and destroying a decade of job gains at the end of this first quarter. The next set of numbers from the US commerce department will reflect the real scale of the impact more accurately.
What is the prediction?
A senior economic adviser to the White House, Kevin Hassett, has predicted that the GDP, which is the primary measure of the economic stability, could drop at an alarming rate of about 30% in the upcoming quarter. Goldman Sachs mentions that in the middle of this year, there can be 15% unemployment rate, which is currently 4.4%.
Since the end of the year 2008, the fall is the steepest quarterly decline in the GDP when the economy shrank by the rate of 8.4%. However, on the present forecasts, the drop-off could quickly oppose the economic failure of the Great Depression. In 1932, the US economy dropped off 13% over the year.
The chief economist at the PNC, Gus Faucher, said that the US economy was in hard times, and they had no idea how deep that could be. He also said that while the figure of the quarter seemed so bad, but that was nothing to what they could expect the next quarter. Most of the shutdowns had occurred at the end of the first three months of 2020. PNC was expecting a shrink of approximately 30% that would be the worst quarter in the history.