Q1 GDP = -4.8%

This morning, we got our first look at Q1 GDP. Bear in mind that the first quarter was almost perfectly divided between the coronavirus and pre-coronavirus.

The government said that the economy shrank by 4.8% for the first three months of the year.

Economist surveyed by Dow Jones had expected the first estimate of GDP to show a 3.5% contraction.

This marked the first negative GDP reading since the 1.1% decline in the first quarter of 2014 and the lowest level since the 8.4% plunge in Q4 of 2008 during the worst of the financial crisis.

The biggest drags on the economy were consumer spending, nonresidential fixed investment, exports and inventories. Residential fixed investment, which jumped 21%, along with spending from both the federal and state governments helped offset some of the damage.

Consumer expenditures, which comprise 67% of total GDP, plunged 7.6% in the quarter as all nonessential stores were closed and the cornerstone of the U.S. economy was taken almost completely out of commission. Durable goods spending tumbled 16.1% while expenditures on services were down 10.2%.

Exports dropped 8.7% while imports fell 15.3%, including a 30% drop in services.

The S&P 500 is up over 2,900 this morning.

Posted by on April 29th, 2020 at 9:38 am


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