The bad economic news continuing to roll in.
While the weekly drumbeat of job losses have already told the tale — with 26 million having already filed for unemployment during the coronavirus shutdown — first-quarter U.S. GDP gave a fuller picture of the pain being felt.
GDP fell 4.8 percent, down from a 2.1 percent increase at the end of 2019. And that decline came with just a few weeks of serious COVID-19 disruption during the three months.
The Bureau of Economic Analysis, which detailed the drop, said real disposable personal income increased just 0.5 percent for the quarter, following a 1.6 percent rise in the fourth quarter. The personal savings rate jumped to 9.6 percent from 7.6 percent.
Many retailers were already struggling to capture the imagination and discretionary dollars of consumers over Christmas, when employment was at a 50-year high. But now stores are closed, sales associates are furloughed and a return to anything like normal is a long way off.
Federal Reserve chair Jerome Powell acknowledged the hardships many are enduring, the tough road ahead on Wednesday, but sought to reassure the nation that the central bank would continue to take aggressive efforts to support the economy.
“Many businesses have closed, people have been asked to stay home, and basic social interactions are greatly curtailed,” Powell said at a news conference. “People are putting their lives and livelihoods on hold, at significant economic and personal cost. All of us are affected, but the burdens are falling most heavily on those least able to carry them.
“It is worth remembering that the measures we are taking to contain the virus represent an investment in our individual and collective health, as a society, we should do everything we can to provide relief to those who are suffering for the public good,” he said.
The Fed has been working to maintain the credit market so households and businesses can continue to borrow to carry them through.
Just how far away the light at the end of the tunnel is, remains to be seen, although some states such as Texas, South Carolina and Georgia are starting to reopen their economies while other states on the West Coast have set timetables for starting to come back over the next month or so.
Stores might be starting to open, but the consumer isn’t expected to come rushing right back.
“The next phases are more uncertain, highly uncertain, but we will go through a phase starting fairly soon where we begin to reopen the economy, and probably the economic activity will pick up, as consumer spending picks up,” Powell said. “Consumer spending has gone down quite a lot. It will begin to pick up as people start to return to their normal patterns of spending.
“But the chances are that it won’t go right back to where we were because people will, until they are confident of that the virus is well and truly under control, then they will be somewhat reluctant, probably, to undertake certain kinds of activities. It may take some time for us to get back, it probably will take some time for us to get back to a more normal level of unemployment, and ultimately the maximum employment.”
Wall Street investors are at least feeling a little better with the talk of even a tentative reopening and a steady flow of support from the Fed.
The Dow Jones Industrial Average gained 2.2 percent, or 532.31 points, to 24,633.86 Wednesday as retailers and related companies perked up some. Among the gainers were Guess Inc., up 15.3 percent to $9.66; RealReal Inc., 11.3 percent to $12.47; Capri Holdings, 10.1 percent to $16.56; Simon Property Group Inc., 8.8 percent to $68.80; PVH Corp., 6.6 percent to $53.95, and Tapestry Inc., 5.8 percent to $17.05.