Worst Economy in a Decade. What’s Next? ‘Worst in Our Lifetime.’

U.S. gross domestic product declined in the first quarter, dragged down by the pandemic’s grip in March. Don’t even ask about this quarter

By Ben Casselman @ NYTimes.com, April 29, 2020, with graph illustration

The coronavirus pandemic officially snapped the United States’ economic growth streak in the first three months of the year. The question now is how deep the damage will get — and how long the country will take to recover.

U.S. gross domestic product, the broadest measure of goods and services output, fell at a 4.8 percent annual rate in the first quarter of the year, the Commerce Department said Wednesday. That is the first decline since 2014, and the worst quarterly contraction since 2008, when the country was in a deep recession.

There is much worse to come. Widespread layoffs and business closings didn’t hit until late March in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully, to show that G.D.P. contracted at an annual rate of 30 percent or more, a scale not seen since the Great Depression.

“They’re going to be the worst in our lifetime,” Dan North, chief economist for the credit insurance company Euler Hermes North America, said of the second-quarter figures. “They’re going to be the worst in the post-World War II era.” [....]

Sounds like we are lucky to have Powell still there:

Fed Suggests Tough Road Ahead as It Pledges to Help Insulate Economy

The Federal Reserve left rates unchanged near zero at its April meeting and suggested it would not be raising them anytime soon as the virus takes a huge toll on economic growth.

By Jeanna Smialek @ NYTimes.com, April 29

Jerome H. Powell, the Federal Reserve chair, struck a worried tone at his first regularly scheduled news conference since the coronavirus shuttered the United States economy, calling the job losses taking hold “heartbreaking” and predicting a long road ahead.

Mr. Powell, who had been presiding over the longest economic expansion on record, has watched as the strongest labor market in generations slipped away. More than 26 million workers have lost jobs as quarantines and lockdowns close businesses, sapping the fuel from a consumer-driven economy.

While much of that pain could prove temporary, the world’s most important economic leader sounded an alarm that the recovery could be slow and halting — and that the damage virus containment efforts have inflicted on the economy could be especially painful for the most vulnerable.

“We were hearing from low- and moderate-income and minority communities that this was the best labor market they’d seen in their lifetime,” he said. “It is heartbreaking, frankly, to see that all threatened now. All the more need for our urgent response, and also that of Congress.”

Mr. Powell promised that the Fed would push its powers to their limit to help the economy, keeping rates low and funneling credit into crucial markets. But he also made it clear that elected policymakers must do their part to keep households and businesses from falling too far behind, and underlined repeatedly that the stakes were high, particularly for the job market.

“Longer and deeper downturns have left more of a mark, generally,” Mr. Powell said. “That’s why the urgency in doing what we can to prevent that longer-run damage. It doesn’t have to be that way.” [....]