NATIONWIDE -- The coronavirus has brought about the biggest drop in gross domestic product in the first quarter since 2008, the Commerce Department reported Wednesday, and things don’t look good from here.
- GDP shrank 4.8% from January to March
- Forecast for April-June worse
- Hoped economy will rebound quickly once pandemic has ended
The GDP shrank 4.8 percent from the beginning of January to the end of March. GDP is a monetary measure of market value of all goods and services produced in a specified time period.
The forecast for the April-June forecast is much grimmer, however, as businesses didn’t start shutting down in earnest due to social distancing measures until March.
According to the Associated Press, the Congressional Budget Office has estimated economic activity will drop at a staggering 40 percent annual rate this quarter.
With that in mind, it’s no wonder states including Texas are moving to jumpstart the economy as quickly as possible, despite the risk of accelerating the spread of COVID-19.
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Beginning Friday, May 1, by order of Texas Gov. Greg Abbott, restaurants, movie theaters, libraries and retail outlets will be permitted to reopen so long as occupancy is capped at 25 percent.
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It’s anticipated that by mid-May bars, hair salons and other businesses will be permitted to reopen. If things go well over the next few weeks, businesses may be able to expand to 50 percent of occupancy.
Still, just because people will be permitted to shop, eat out and attend movies doesn’t mean they will in great numbers. In just a few weeks, tens of thousands of Americans were laid off. Consumer spending counts for roughly 70 percent of the GDP, and it declined by 7.6 percent in the first quarter.
Some economists are hopeful for a quick recovery once the pandemic has subsided, with what has been described as a V-shaped recovery.
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Increasingly, though, analysts are predicting a slower recovery, as coronavirus fears subside and people return to shopping, eating in restaurants and traveling.
The Associated Press contributed to this story.