The Commerce Department is expected to issue a report on Wednesday (April 29) with estimates of a minimum decrease of 5 percent in the gross domestic product (GDP) in the January-March quarter, according to a report in the Associated Press (AP) on Tuesday (April 28).
This will be the steepest quarterly decline in the GDP since the Great Recession, and the first quarterly contraction in six years.
“The recession will be worse than the one we went through from 2007 to 2009,” said Sung Won Sohn, economics and business professor at Loyola Marymount University in Los Angeles.
There are also mounting fears that COVID-19 could once again escalate as soon as the economy is reopened, forcing it to close again.
“The virus has done a lot of damage to the economy, and there is just so much uncertainty now,” said Mark Zandi, chief economist at Moody’s Analytics.
A recent Wall Street Journal survey of economists indicated that almost 85 percent are forecasting that the economy to start recovering in the second half of 2020 — as long as the pandemic subsides — as companies reopen to meet consumer demand for merchandise.
“This is like a really bad hurricane hitting the entire economy,” said Richard Moody, chief economist at Regions Financial Corp.
Unemployment last month was 4.4 percent, a three-year high from the 50-year low of 3.5 percent in February. Over 10 million people sought unemployment benefits by the end of last month. By April 18, the number rose in excess of $26 million.
Retail sales — roughly 25 percent of household spending — sank 8.7 percent last month as spending dropped at bars and restaurants and people stopped buying gas and new cars.
The Federal Reserve said a measure of factory, utility and mining output dropped 5.4 percent last month, its biggest monthly decline since 1946.
According to numbers predicted by experts, the economic shortfall could hit up to $1.5 trillion across the U.S., and a recession is almost certainly going to happen.