GDP shrinks 4.8%—but what comes next will be far worse

The economy had its worst contraction since 2008.

In the first quarter of 2020 the U.S. real GDP declined by 4.8% from the same period a year ago, according to data published Wednesday by the U.S. Bureau of Economic Analysis. Economists polled by Refinitiv were expecting a 4% drop at an annualized rate.

Today’s reported fall, for the quarter ending March 31, compares to a 2.1% increase in the fourth quarter of 2020.

“It is backward looking, and especially backward looking this time. Everything changed in the middle of March,” says Dan North, senior economist at Euler Hermes. In the final two weeks of March, nearly 10.2 million Americans filed unemployment claims. In the three weeks since we’ve had another 16.3 million claims.

In the second quarter North told Fortune he projects a staggering 30% drop in GDP as the full impact of the coronavirus shutdowns are felt.

“The U.S. economy ran into a brick wall in March and some of the impact will be visible in first-quarter GDP… but [it’s] nothing compared to what’s ahead,” wrote Ryan Sweet, Head of Monetary Policy Research at Moody’s Analytics.

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