Advertisement

U.S. economy shrank 5% in first 3 months of 2020, update shows

Stacks of $100 bills are pictured in New York City on June 17. The Commerce Department said Thursday said many Americans canceled, restricted or redirected spending in January, February and March as a result of the coronavirus crisis. Photo by John Angelillo/UPI
Stacks of $100 bills are pictured in New York City on June 17. The Commerce Department said Thursday said many Americans canceled, restricted or redirected spending in January, February and March as a result of the coronavirus crisis. Photo by John Angelillo/UPI | License Photo

June 25 (UPI) -- The U.S. economy shrank by 5 percent in the first quarter of 2020, reflecting economic damage from the COVID-19 crisis, the Commerce Department said in an update Thursday.

Citing "rapid changes in demand as businesses and schools switched to remote work or canceled operations," the department said in the report -- its third estimate of first-quarter performance -- that U.S. gross domestic product declined at an annualized rate of 5 percent between Jan. 1 through March 31.

Advertisement

In its initial estimate in April, the department estimated a 4.8 percent Q1 decline. The 5 percent decline is the U.S. economy's steepest since the 1930s.

Thursday's report said U.S. consumers "canceled, restricted or redirected" spending in the first quarter, mainly as a result of the coronavirus pandemic.

The contraction also resulted from a decline in exports and lower outlays for non-residential capital goods, like commercial real estate. The declines were partly offset by positive measures in home buying and government spending.

A forecast by the Federal Reserve Bank of Atlanta projects a decline of more than 45 percent in the second quarter, which experts say will give a better glimpse of the COVID-19 impact.

Advertisement

The Labor Department said Thursday another 1.5 million American workers filed for unemployment benefits last week.

COVID-19 pandemic alters life in New York City

Mannequins with face masks and designer clothing fill a window at a Diane Von Furstenberg store in New York City on September 8, 2020. Photo by John Angelillo/UPI | License Photo

Latest Headlines