US Q1 GDP shrinks by 4.8% due to COVID-19 pandemic

US economic activity in the first quarter contracted at an annual rate of 4.8 percent amid the COVID-19 impact, the biggest decline since the Great Recession, the US Commerce Department reported Wednesday.

The decline in first quarter real gross domestic product (GDP) was, in part, due to the response to the spread of COVID-19, as governments issued "stay-at-home" orders in March, according to the "advance" estimate released by the department's Bureau of Economic Analysis.

Widespread "stay-at-home" orders and other measures to contain the virus led to "rapid changes in demand," as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending, the bureau noted.

The decrease in real GDP in the first quarter reflected negative contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and private inventory investment that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending, the report showed.

In the fourth quarter of 2019, real GDP increased 2.1 percent.