The U.S. economy plunged at an annual rate of 4.8% in the first quarter as the coronavirus pandemic shut wide swaths of American industry and white-collar businesses in the country’s biggest downturn in more than a decade, the Commerce Department said Wednesday. The impact was so pronounced that the decline for the January-to-March period occurred entirely in the last three weeks of March as the effect of the pandemic swept through the world’s biggest economy. It forced the closure of major factories with thousands of workers, office complexes and mom-and-pop retail stores in cities large and small. But the true economic impact of the pandemic won’t be known for three months, when second-quarter statistics are released, because the brunt of the worker layoffs have occurred in April. Already, 26 million workers have lost their jobs, with millions more being added to the ranks of the unemployed each week. Mohammad Ikram closes a large door to his business Hot Stop, fully stocked but closed during the coronavirus pandemic, on the boardwalk in Atlantic City, N.J., April 28, 2020.The first-quarter plunge was the country’s biggest since the Great Recession from 2007 to 2009. Economists are predicting the second-quarter drop could reach to as much as 30%. A handful of state governors have gingerly started to ease work closures, telling barber shops, nail salons, restaurants and some stores they can reopen if they want to. The ensuing question is then whether customers are willing to venture into public to patronize the businesses or are too worried about the spread of the coronavirus that has already killed more than 58,000 Americans. Treasury Secretary Steven Mnuchin said this week that the economy should “really bounce back” this summer as states lift stay-home orders at the same time trillions of dollars in federal emergency spending flows through the U.S. economy. But most independent economists are much less optimistic. They are questioning whether the lost or diminished parts of the U.S. economy will recover and how soon. The Federal Reserve, which has already cut key interest rates to near zero, is meeting in Washington and could offer its assessment of the economy in an afternoon statement and announce then any further plans it has to boost the U.S. economy.
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