US economy contracted by 5 per cent in Q1
GDP is revised and Covid-19 job losses pass 40 million
The US economy suffered an even worse contraction in the first quarter of 2020 than previously thought.
The Commerce Department announced on Thursday that the gross domestic product (GDP) of the world’s largest economy actually fell at an annualised rate of 5 per cent in the first three months of the year, rather than the 4.8 per cent drop estimated in April.
This revision reflected weaker investment by businesses in their inventories, which itself was offset by marginally stronger consumer spending. The wider cause of the largest quarterly drop since 2008’s Q4 contraction of 8.4 per cent nonetheless remains the Covid-19 crisis.
Per the official statistics, the United States currently the nation worst-affected by the novel coronavirus pandemic, with over 1.7 million confirmed cases and more than 100,00 deaths.
Although the virus itself only arrived in the country towards the end of the quarter, it nonetheless wreaked significant economic damage, with the lockdowns imposed to limit its spread shuttering many businesses forever.
The toll of the Covid-19 crisis on American workers was made further evident on Thursday, when the Department of Labor announced that 2.1 million Americans made initial claims for unemployment benefits last week.
This latest revelation brings the total number of American workers laid off since the start of the crisis to 40 million. Although the number of weekly registrants has fallen consistently, down from a peak of 6.6 million in early April, millions more workers are expected to register in the coming weeks as the welfare bureaucracy struggles with severe delays.
With 1 in 4 American workers filing for unemployment support already, the nation’s total unemployment rate is expected to surpass 20 per cent by the end of May, a level not seen since the Great Depression of the 1930s.
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