U.S. Economy Declines at the Fastest Pace Since 2008

by Robert Hughes
The American Institute for Economic Research

Real gross domestic product fell at a 4.8 percent annualized rate in the first quarter, down sharply from a mediocre 2.1 percent pace in the fourth quarter of 2019, the worst performance since the final quarter of 2008 when the economy plunged 8.4 percent. Over the past four quarters, real gross domestic product is up just 0.3 percent, the slowest pace since the final quarter of 2009 (see first chart). On a nominal basis, gross domestic product fell 3.5 percent in the first quarter, putting the change from a year ago at 2.1 percent (see first chart).

Weakness in the first quarter was expected as the outbreak of COVID-19 and government responses including shelter-in-place orders for individuals and the shutdown of nonessential businesses crushed the labor market and distorted economic activity.

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