The Fed is now permanently stuck at zero.
The negative 4.8% decline in in the first quarter was stunning. Importantly, that reading only encapsulated the impact of the economic “shutdown” in that last two weeks of the quarter. This suggests, considering the entire month of April (1/3rd of the quarter) was a wash, the numbers will worse next quarter.
The NYT’s Ben Casselman had a good summary of the devastation:
“U.S. gross domestic product fell at a 4.8 percent annual rate in the first quarter of the year, the Commerce Department said Wednesday. That is the first decline since 2014, and the worst contraction since 2008, the last deep recession.
There is much worse to come. Widespread layoffs and business closings didn’t hit until late March in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully. GDP likely contracted in the second quarter at an annual rate of 30 percent or more, a scale not…