By Dan McCaleb | The Center Square
U.S. Gross Domestic Product shrank by 4.8 percent in the first quarter of the year, a result of stay-at-home orders that shuttered businesses in response to COVID-19.
It was the first negative GDP since the first quarter of 2014 showed a 1.4 percent decline and the largest drop since the fourth quarter of 2008, when it fell 8.4 percent during the Great Recession.
“The decline in first quarter GDP was, in part, due to the response to the spread of COVID-19, as governments issued ‘stay-at-home’ orders in March,” the U.S. Bureau of Economic Analysis said in a statement. “This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending.”
More than 26 million Americans have filed unemployment claims over the past five weeks. Retails sales dropped by 8.7 percent in March.
“The GDP numbers today show difficulty and hardship but are not surprising as Americans continue to help slow the spread of this unforeseen virus,” White House spokesman Judd Deere told Fox Business.
Gross Domestic Product is the total market value of goods and services produced over a specific time period. It is viewed as a measure of a country’s economic health.
30 million jobs saved by first round of PPP
President Donald Trump said Tuesday that the Payroll Protection Program (PPP) passed in phases by Congress and signed by the president has saved 30 million jobs or more as businesses deemed nonessential were forced to shut down to slow the spread of COVID-19.
“The first round of funding provided more than 1.6 million small businesses with over $340 billion so that American workers can retain their jobs, receive their paychecks and help our economy take off quickly once America reopens for business, which is happening right now,” Trump said of funding included in the $2 trillion CARES Act that passed in late March.
“Our swift action supported or saved 30 million American jobs, at least,” he said at a White House news conference where several business executives and workers helped by PPP funds also spoke.
The second round of PPP funding is being processed after it was approved by Congress and signed by Trump last week. This second round includes an additional $320 billion for small businesses.
To date, 450,000 loan applications have been processed from phase two, totaling more than $50 billion.
Mark Underwood, a chef at Ford’s Fish Shack in Virginia, was furloughed when restaurants were forced to close in the state.
“With the PPP, it has now given life to my family, it has injected hope in our business and it’s allowing us to fight the fight,” Underwood said.
Chris Stansbury, co-founder of West Virginia Eye Consultants in Charleston, celebrated its ninth anniversary in February with seven locations, seven doctors and almost 60 employees.
“Just a month later, thanks to COVID-19, we shut most of it down,” Stansbury said. “My partners were overwhelmed.”
Stansbury said he applied for a PPP loan through the Small Business Administration and received a loan.
“It’s been a lifeline for us,” he said. “As soon as we received those funds, we were able to start paying our utilities, our rent, start bringing some of the employees back we need to get staged.”
With some states starting to reopen their economies with restrictions, Trump said the country’s economy would come back.
“We built the greatest economy anywhere in the world two months ago,” Trump said. “We’re going to build it again and we’re going to build it fast.”