US economy sees sharpest dip since Great Recession due to pandemic

Today, the Department of Commerce has officially announced that the US economy shrank 4.8% in the first quarter of this year—the biggest quarterly decline in gross domestic product (GDP) since the Great Recession of 2008, according to the Guardian.

In order to contain the spread of the coronavirus, the lion’s share of the US economy was shut down in March, resulting in 26 million people filing for unemployment. Yet the worst could still be ahead, since the shutdown began only in the last part of Q1.

Big banks suffer massive losses as coronavirus crisis continues

Major banks around the world continue to suffer huge financial losses caused by the coronavirus pandemic, with British bank HSBC reporting a 50% fall in profits linked to the outbreak. Spain’s Santander also recently suffered an 82% decline in quarterly net profit. According to BBC News, HSBC’s pre-tax earnings for Q1 2020 amounted to $3.2 billion—almost half of $6.2 billion the bank earned a year ago. HSBC has reported a 50% fall in profits linked to the coronavirus outbreak. Image: BBC News HS...

“It’s kind of incredible when you think about the fact that the economy was running pretty much on a normal footing for over 80% of the first quarter,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said on Bloomberg Radio.

The worst quarter in history?

Kevin Hassett, a senior economic adviser to the White House, has predicted that American GDP could fall at an annualized rate of 30% in the next quarter, effectively overshadowing— by a long way—both the 2008 recession and the Great Depression of 1932, when the US economy shrank 8.4% and 13%, respectively.

Per the report, Goldman Sachs also expects unemployment to reach 15% by the middle of 2020—up from the current 4.4%.

“The US economy is in recession right now. We just don’t know how deep,” said Gus Faucher, chief economist at PNC.

He also noted that the second quarter of 2020 could turn out much worse than the first one, which may become “by far the worst quarter in history.”

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Still, Faucher predicted that a strong rebound will follow once the pandemic is under control, although the process of recovery won’t be as fulminant as the collapse.

As Decrypt previously reported, big banks around the world are suffering massive losses as the coronavirus crisis continues.

Just a couple of weeks ago, the International Monetary Fund’s economic prediction has also stated that the fallout will be “far worse” than the financial crisis of 2008 and “the worst recession since the Great Depression.”