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US economy shrinks 4.8% in Q1 on Covid-19 response

US economy shrinks in Q1 on Covid 19 response

The U.S. economy showed a more than predicted contraction in the first quarter this year due to the government’s response to the spread of COVID-19.

The world’s biggest economy shrank by 4.8 percent in the January-March quarter on annualized basis, following a 2.1 percent expansion in the last quarter of 2019. That was worse than analysts’ forecasts of 4.0 percent drop.

The quarter-on-quarter reading was roughly 1.2 percent contraction, as companies shed jobs and households reduced their spending.  

The contraction during the first quarter is considered the first since the summer of 2009.

“The decline in first quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued “stay-at-home” orders in March,” the Bureau of Economic Analysis said.

As of 13:10 GMT, the US dollar index continued to trade lower at 99.66, resuming its fall for a fourth consecutive session.

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