Corona Crisis Causes Strong Economic Contraction in the United States

The sustained growth of the US economy ended in the first quarter of this year due to the corona crisis.

The gross domestic product (GDP) fell by 4.8 percent in the period. This was the most vigorous contraction since the outbreak of the financial crisis in 2008.

The outcome of the first estimate by the United States government was worse than what economists had expected. They generally accounted for a contraction of 4 percent after growth of 2.1 percent a quarter earlier.

Extensive measures have also been taken in the United States to prevent the spread of the coronavirus.

For example, a lockdown applied in many regions. Restaurants and shops were closed in connection with the virus. Americans were also ordered to stay at home.

Now it appears that consumers have become more cautious about spending. Consumer spending fell by 7.6 percent, marking the sharp decline since 1980.

The impact of the corona crisis on GDP in the second quarter is expected to be even higher. Experts take into account a shrinkage that has not been seen since the measurements began in the 1940s.

The bright spot was that expenditure on housing construction grew strongly. Due to warm weather and low mortgage rates, they rose by 21 percent.