Yes, it’s bad, but as with the initial Q1 estimate, this just gives a taste of what’s to come. The COVID-19 shutdown in the final three weeks of the first quarter turned a growing economy into a -5% annualized GDP drop, slightly worse than the -4.8% in the initial estimate. Worse still are the continuing jobless claims numbers, to which we’ll get in a moment:
Real gross domestic product (GDP) decreased at an annual rate of 5.0 percent in the first quarter of 2020 (table 1), according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.1 percent.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the decrease in real GDP was 4.8 percent. With the second estimate, a downward revision to private inventory investment was partly offset by upward revisions to personal consumption expenditures (PCE) and nonresidential fixed investment (see “Updates to GDP” on page 2). …
Real gross domestic income (GDI) decreased 4.2 percent in the first quarter, in contrast to an increase of 3.1 percent (revised) in the fourth quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 4.6 percent in the first quarter, in contrast to an increase of 2.6 percent in the fourth quarter (table 1).
Current‑dollar GDP decreased 3.5 percent, or $191.6 billion, in the first quarter to a level of $21.54 trillion. In the fourth quarter, GDP increased 3.5 percent, or $186.6 billion (tables 1 and 3).
Income dropped, but prices rose — a combination that will further squeeze consumer spending, even if joblessness doesn’t: