In the first quarter of the year, the US economy recorded a sharp decline that the country had not known for a decade, with the closure closing in order to contain the spread of the Coronavirus.
The world’s largest economy declined by an annual rate of 4.8 percent, according to official figures released on Wednesday.
It is the first time that the US economy has suffered since 2014, which ended in record expansion.
However, these figures do not reflect the full picture of the crisis, as not all restrictions were imposed until the end of March.
On Wednesday, the central bank’s policymakers, who met this week, said the crisis had caused “enormous human and economic difficulties in the United States and around the world”.
“The ongoing public health crisis will greatly affect economic activity, employment and inflation in the near term, and will pose significant risks to the economic outlook in the medium term,” the Federal Reserve said in a statement.
Since the start of the Coronavirus crisis, more than 26 million people in the United States have applied for unemployment benefits, and the United States has witnessed a historical decline in the business cycle and consumer confidence.
Analysts expect growth to shrink by 30 percent or more in the three months from April to June.
Mark Zandi, chief economist at Moody’s, said it was unprecedented.
The downturn in the US economy is part of the global economic slowdown as a result of the spread of the Corunavirus.
In China, where restrictions were imposed for most of the first quarter of the year, the economy declined by 6.8%.
It is the first seasonal contraction since records began in 1992.
On Wednesday, Germany announced that its economy could suffer a historic decline of 6.3 percent this year.
Economy Minister Peter Altmayer said that Germany will face the worst recession since 1949 – the date of the founding of the history of the Federal Republic.
Before the outbreak of the Corona Virus overthrew the global economy, the US economy was expected to grow by about 2 percent this year.
However, by mid-April, 95% of the country had entered a state of closure in various degrees.
Although some states violated the regulations, they are still valid in many other states, including those that are the main driver of the economy such as New York and California.
And many companies that share the results of the annual seasons with investors have warned of important blows caused by the epidemic.
General Electric said its revenue fell 8 percent in the first quarter of the year, while “Boeing”, which was already in crisis after a fatal crash of its “737 Max”, reported a 48 percent drop, and said it plans to cut production and the number of jobs.
“The virus affects every aspect of our business, including airline customer demand, production continuity and supply chain stability,” said company CEO Dave Callon.
The Commerce Department said that consumer spending – which accounts for about two-thirds of the US economy – decreased 7.6 percent in the first three months of the year.
Spending on food services and accommodations fell more than 70 percent, while clothing and footwear purchases fell more than 40 percent.
Health spending has also decreased – despite the spread of the Coronavirus – as fear of infection has pushed doctors to delay routine treatments and medical care.
The economic blow to the US economy is expected to be more painful between April and June.
But economists say the first-quarter estimate is likely to see a slight decline after the government received more data.
It is very difficult to gauge the depth of the decline, Mark Zandi said: “We will not really know the extent of the economic damage for years”.
The United States responded to the economic crisis with new spending of more than $ 3 trillion.
The Fed also made a major intervention, cutting interest rates within a range of 0 to 0.25 percent and using emergency powers to expand bond purchases and grant loans.
On Wednesday, the Federal Reserve left interest rates unchanged, saying it was committed to using “a full set of tools” to support the economy.