WASHINGTON: The coronavirus pandemic has pushed the world’s largest economy towards recession, the US government announced on Wednesday, as the country’s gross domestic product (GDP) shrank at a 4.8 per cent annual rate in the first quarter.

“Today’s GDP numbers are weak, but in line with expectations as a result of the Covid-19-driven disruptions to daily lives at home and around the globe that have rocked global markets and supply chains,” said Commerce Secretary Wilbur Ross.

The statement, issued by his office, however, also underlined the Trump administration’s determination to come out of this crisis soon.

“We continue to have the most resilient economy in the world, driven by innovative and hardworking Americans who have shown that they are willing to make the needed sacrifices to defeat this invisible enemy,” Secretary Ross said.

It is the sharpest decline since the Great Recession and puts an abrupt end to the longest economic expansion in US history, which began in 2008. It is also worse than the 3.9 per cent decrease economists had projected earlier this month.

Analysts appearing on various television channels warned that this could be a prelude to a more massive decline in the spring. They warned that the economy may contract by 25 per cent or more in the second quarter, with some forecasts putting the decline at a record 40 per cent.

Before the Covid-19 crisis, the US economy had been expanding at a steady two per cent for the last 11 years. The fall began early and by March much of the economy had shut down as states enforced a lockdown to contain the coronavirus, which has already infected more than a million people across the United States.

The US death toll, almost 60,000 by Wednesday afternoon, is also the highest in the world.

The lockdown has forced 26 million people to file for unemployment benefits, wiping out a decade of job gains.

“You’re looking at something like minus 20 per cent to minus 30 per cent (erosion of the GDP) in the second quarter,” warned Kevin Hassett, an economic adviser to the White House.

Mr Hassett told the CNBC news channel that he expects April’s unemployment rate to surge to 16-17 per cent. But if the outbreak abates and most states reopen, “we really could be looking at a rapid recovery”, he added.

Published in Dawn, April 30th, 2020