Bureau of Economic Analysis posts a 2.1% economic growth in the U.S in Q4

Bureau of Economic Analysis posts a 2.1% economic growth in the U.S in Q4

  • Bureau of Economic Analysis posts a 2.1% economic growth in the U.S in Q4.
  • Economists expect the U.S GDP to contract by up to 6% in the first quarter.
  • Economic growth in the United States can tank up to 35% in the second quarter.

The Bureau of Economic Analysis (BEA) released its quarterly report on the U.S GDP. The data showed a 2.1% growth in the U.S economy in 2019’s fourth quarter. According to economists, however, the U.S is now expected to take a few quarters before it posts economic growth again as the sharply rising cases of Coronavirus are likely to hit the U.S GDP hard in 2020.

After the 3rd and final evaluation of Q4, the Commerce Department announced no change on Thursday in the overall quarterly economic growth as compared to the previous estimate. Components, on the other hand, were reported slightly changed with business investment and government spending coming out weaker but consumer spending posting a broader improvement.

Economists Estimate Up To 6% Reduction In The U.S GDP In Q1

With economic activity seeing an abrupt stop due to the Coronavirus pandemic, many analysts have forecast negative figures for U.S GDP in the January to March quarter. Estimates for percentage decrease in the annual rate of GDP in the current quarter go as high as 6%.

Typically, negative GDP in two quarters in a row is defined as recession and many economists are anticipating the U.S to have already started down the path.

Chairman of the Federal Reserve, Jerome Powell, also said in an interview on Thursday that the U.S may be in a recession. In his statement on Friday, however, Powell said that the U.S Fed is willing to adopt further measures directed at supporting the economy amidst the health emergency and help it rebound from its ongoing downturn.

Such measures will come on top of the aggressive actions that the Federal Reserve has already taken including billions of dollars of stimulus and slashing rates to zero.

U.S Quarterly GDP Can Tank Up To 35% In Q2

The U.S GDP in the next quarter (April-June), as per economists, is likely to post the sharpest decline in economic growth with the quarterly GDP tanking up to 35%.

Wells Fargo, for instance, forecasts a 14.7% decline in the U.S quarterly GDP in April-June that will mark the steepest quarterly decline in 73 years of record-keeping. The largest quarterly decline in the U.S GDP so far was recorded in 1958 at 10%.

The U.S economic growth is expected to keep under pressure in the next quarter as the Coronavirus has pushed the government into a pause on several components of the economy. The country is resorting to restricting people to their homes. As consumers make up 70% of the U.S economic activity, such restrictions are expected to make a huge dent in the U.S GDP at large.

EUR/USD responded positively to multiple economic data on Thursday. The pair rose from 1.09 to a daily high of 1.1055.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.

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