US Q1 GDP crashes as consumption and business investment collapse

The US economy shrank sharply and more quickly than expected at the start of the year, even before being hit by the full force of the Covid-19 pandemic.

According to the Department of Commerce, gross domestic product plummeted at an annualised pace of 4.8% over the three months ending in March (consensus: -4.0%).

Business investment was especially weak, dropping by 8.6%, although the biggest drag on GDP growth was the 7.6% plunge in household consumption.

Net foreign trade meanwhile provided a small offset, but only because imports fell much more quickly than exports in response to extraordinarily weak domestic demand.

"Grim, but much grimmer is coming," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.