June 25 (UPI) — The U.S. economy shrank by 5 percent in the first quarter of 2020, reflecting economic damage from the COVID-19 crisis, the Commerce Department said in an update Thursday.
Citing “rapid changes in demand as businesses and schools switched to remote work or canceled operations,” the department said in the report — its third estimate of first-quarter performance — that U.S. gross domestic product declined at an annualized rate of 5 percent between Jan. 1 through March 31.
In its initial estimate in April, the department estimated a 4.8 percent Q1 decline. The 5 percent decline is the U.S. economy’s steepest since the 1930s.
Thursday’s report said U.S. consumers “canceled, restricted or redirected” spending in the first quarter, mainly as a result of the coronavirus pandemic.
The contraction also resulted from a decline in exports and lower outlays for non-residential capital goods, like commercial real estate. The declines were partly offset by positive measures in home buying and government spending.
A forecast by the Federal Reserve Bank of Atlanta projects a decline of more than 45 percent in the second quarter, which experts say will give a better glimpse of the COVID-19 impact.
The Labor Department said Thursday another 1.5 million American workers filed for unemployment benefits last week.