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BUSINESS Friday 26 June 2020
U.S. GDP fell at 5.0% rate in Q1; worse is likely on the way

By MARTIN CRUTSINGER avoid a double-dip reces-
AP Economics Writer sion, an effective vaccine
WASHINGTON (AP) — The needs to be available next
U.S. economy shrank at a year and new waves of
5.0% rate in the first quar- coronavirus cases will need
ter and a vastly worse per- to do less damage than the
formance is expected in first wave. Congress needs
the current three-month to soon pass another pack-
period, when the corona- age of at least $1 trillion in
virus pandemic began to further support for laid-off
spread across the U.S. workers and struggling busi-
The Commerce Depart- nesses, Zandi said.
ment reported Thursday "If any of these three things
that the decline in the gross don't happen, then the
domestic product, the total outlook is much darker,"
output of goods and ser- Zandi said. "I think we are in
vices, in the January-March a recovery mode right now
quarter was unchanged but the economy is very
from the estimate made a fragile."q
month ago.
It was the sharpest quar-
terly decline since an 8.4%
tumble in the fourth quarter In this June 20 2020 file photo, a "Store For Rent" sign is displayed at a retail property in Chicago.
of 2008 during the depths Associated Press
of the worst financial crisis
since the Great Depression. mic losses that would mean starting this summer. Larry covery is an improving
The first quarter period cap- a decline in economic out- Kudlow, the president's health outlook," said Lydia
tured just two weeks of the put for the entire year. chief economics adviser, Boussour, senior U.S. econ-
shutdowns that began in While overall GDP was un- said on Thursday that even omist at Oxford Economics.
many parts of the country changed for the first quar- with the resurgence in CO- "Amid rapidly rising infec-
in mid-March. ter, the composition shifted VID-19 cases, the admin- tions across many states,
Economists believe that slightly with downward revi- istration is still looking for a risks to the outlook are dan-
GDP has plunged around sions to consumer spend- strong recovery in the sec- gerously tilted to the down-
30% from April through the ing, exports and business ond half of this year. side."
end of this month. inventories offset by an up- "I think the strong V-recov- Financial markets took a
That would be the biggest ward revision to business in- ery is still right there," Kud- sharp nosedive Wednes-
quarterly decline on record vestment. low said in an interview on day, reflecting new wor-
by a long shot: Three times The Thursday report was the Fox Business Network. ries about reports of rising
bigger than a 10% drop in the government's third and Kudlow predicted GDP will coronavirus cases in many
the first quarter of 1958. final look at first quarter rise at a 20% annual rate in states. They rose moderate-
Forecasters believe the GDP. the third quarter and the ly Thursday.
economy will rebound in The panel of economists fourth quarter and then "I can't remember the
the second half of the year. that determines when U.S. rise by 5% in the first quar- economy facing this much
The Congressional Budget recessions begin said that ter, which he said would re- uncertainty," said Sung
Office is predicting a 21.5% February marked the end coup all of the GDP losses Won Sohn, a business and
growth rate in the upcom- of the longest economic in the first half of this year. economics professor at
ing July-September quarter expansion in U.S. history, Economists are nowhere Loyola Marymount Univer-
followed by a 10.4% gain in 128 months of uninterrupt- near that optimistic. They sity in Los Angeles. He said
the fourth quarter. ed growth that began in are worried about the dev- that until a vaccine is found
However, a handful of the wake of the 2008 finan- astating impact of a sec- and widely available, the
states, particularly in the cial crisis. ond wave of infections and high uncertainty can be
South, have begun to re- President Donald Trump has think it will take a couple of expected to last.
port surging infections. And declared that the econo- years to get back the lost Mark Zandi, chief econo-
even if a rebound material- my will come roaring back GDP output. mist at Moody's Analyt-
izes in July, it will follow seis- with a V-shaped recovery "The foundation to this re- ics, said for the country to

Macy's cuts corporate headcount by 3,900 as virus takes toll

By ANNE D'INNOCENZIO reduction will save the rating sales. The New York- business to a new climate.
AP Retail Writer company $630 million per based company also fur- "While the re-opening of
NEW YORK (AP) — Macy's year. In February, before loughed a majority of its our stores is going well, we
said Thursday it's laying off the virus became a pan- workers. Since early May, do anticipate a gradual re-
3,900 people corporate demic, Macy's said it would Macy's has been gradually covery of business, and we
staffers, roughly 3% of its cut 2,000 jobs in its corpo- reopening its stores, which are taking action to align
overall workforce, as the rate office and close 125 had been closed since our cost base with our an-
pandemic takes a financial stores. March 18. Macy's CEO Jeff ticipated lower sales," Gen-
toll on the iconic depart- Like many of its non-es- Gennette has said that cus- nette said in a statement.
ment store chain's sales sential peers, Macy's was tomers are coming back Macy's said that it has re-
and profits. forced to close its physical better than expected, but duced its store staffing
The company said in a re- stores to curb the spread the recovery will be slow, and will readjust as sales
lease that the headcount of the coronavirus, evapo- and it needs to readjust its rebound.q