During the first quarter of 2020, the US economy contracted by 4.8 percent on an annualized basis, the worst contraction since 2008. In total, 30 million Americans have filed for unemployment in the US over the past six months, a rate comparable to Great Depression levels.
Several factors contributed to the massive downturn. Leading among them has been the response to the COVID-19, which has closed down many high employment businesses. Those businesses have closed mostly by government order, either in the form of direct shutdown edicts or as the result of stay-at-home orders. In either case, business activity has slowed dramatically when retailers, restaurants and travel-related enterprises lost both labor and demand. People forced to stay at home spend less. Even healthcare spending declined by 2.3 percent.
Business investment also plummeted with spending on construction declining by almost 10 percent and investment in equipment declined by 15 percent. The value of unsold goods and inventories declined by $29.4 billion. Imports and exports also rapidly declined.
A return to normal economic activity will track with the return in confidence that the pandemic can be controlled either by effective therapies or, ultimately, by a vaccine.