And the numbers are in: The United States gross domestic product (GDP) dropped 4.8% in the first quarter of 2020, according to the Bureau of Economic Analysis. This is the first downward quarterly GDP since 2014, and notable because stay-at-home orders were not issued until the end of the first quarter in mid-March, meaning more GDP carnage is likely to come. The chart below tells the story:
The GDP figure is an estimate; a second estimate will be released in one month, and Goldman Sachs predicts the “true” figure may be closer to 8.25%. Among other data issues, some closed businesses did not provide figures. The 4.8% drop is roughly a full percentage point worse than economists’ estimates.
The GDP grew 2.1% in the last quarter of 2019. Today’s decrease is due to plummets in consumer spending, nonresidential fixed spending (which includes commercial real estate), exports, imports, and private inventory investment; it was partially offset by upticks in government spending and residential fixed spending. (The residential real estate market typically lags months behind other markets.)