The United States economy contracted in the first quarter at its sharpest pace since the Great Recession as stringent measures to slow the spread of the coronavirus almost shut down the country, ending the longest expansion in the nation’s history.

The Commerce Department Wednesday said gross domestic product (GDP) fell at a 4.8% annualized rate in the January-to-March period after expanding at a 2.1% rate in the final three months of 2019.

It said GDP, the total output of goods and services, posted a quarterly drop for the first time in six years. And it was the sharpest fall since the economy shrank at an 8.4% annual rate in the fourth quarter of 2008 in the depths of the Great Recession.

Forecasters say the drop in the January-March quarter will be only a precursor of a far grimmer GDP report to come on the current April-June period, with business shutdowns and layoffs striking with devastating force. The Congressional Budget Office has estimated that GDP will plunge this quarter at a 40% annual rate.

That would be, by a breathtaking margin, the bleakest quarter since such records were first compiled in 1947. It would be four times the size of the worst quarterly contraction on record, set in 1958.

The decline reflected a plunge in economic activity in the last two weeks of March, which saw millions of Americans seeking unemployment benefits. The snapshot will reinforce analysts’ predictions that the economy was already in a deep recession.

Economists in a Reuters poll had been looking for a GDP contraction of 4%, though estimates ranged to as low as negative 15%, while economists surveyed by Dow Jones had expected a contraction of 3.5%.

The GDP report showed that the weakness was led by plummeting consumer spending, which accounts for 70% of economic activity. Consumer spending tumbled at an annual rate of 7.6% in the first quarter – its steepest decline since 1980.

Business investment was also weak: It sank 2.6%, with investment in equipment down a sharp 15.2%.

A rare bright spot in the report was trade, which added 1.3 percentage points to GDP activity in the quarter. Government spending was up 0.7% in the first quarter, a figure that will likely accelerate with all of the support Congress has approved for rescue packages. And housing showed a 21% increase in the first quarter, boosted by lower mortgage rates. But home sales, like much of the economy, have taken a nosedive since the virus-related shutdowns began in mid-March.

"The economy is in free fall; we could be approaching something much worse than a deep recession," said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles. "It's premature to talk about a recovery at this moment; we are going to be seeing a lot of bankruptcies for small and medium-sized businesses."

According to Kwok Ping Tsang, an associate professor of economics in the Virginia Tech College of Science, GDP was slashed by nearly $1.2 trillion from March 19 – around the time parts of the United States began lockdowns – to April 15, a 26% drop in output compared to the same period last year.

Many factories and nonessential businesses like restaurants and other social venues were shuttered or operated below capacity amid nationwide lockdowns to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus.

"For employees who have moved to work-from-home status, it is highly unlikely that labor input remains at 100%," said Tsang. "Employees also must juggle child care, homeschooling and more stressors. Both limitations suggest that our estimates are likely to be biased downward."

The contraction in GDP, together with record unemployment, could pile pressure on states and local governments to reopen their economies.

It could also spell more trouble for President Donald Trump following criticism of the White House's initially slow response to the pandemic, as he seeks reelection in November. Confirmed U.S. COVID-19 infections have topped 1 million, according to a Johns Hopkins University tally.

"We've got the biggest shock since the Great Depression," Trump's economic adviser Kevin Hassett said Tuesday. "It's a very grave shock, and it's something we need to take seriously."

The U.S. Congress has approved a fiscal package of around $3 trillion and the Federal Reserve has cut interest rates to near zero and greatly expanded its role as a banker of last resort, but economists say these measures are inadequate.

They also did not believe that reopening regional economies, as some states are now doing, would return the broader economy to pre-pandemic levels, which they said would take years. They expect an even sharper contraction in GDP in the second quarter.

More pain to come

"You are going to get close to 40% contraction in the second quarter," said Joe Brusuelas, a chief economist at RSM in New York. "It's important that when we talk of reopening, we are not talking about it in a binary fashion. It's not going from zero to one or flipping the switch. Firms are opening but still heavily constrained by public health policy."

Reopening the economy also comes with the risk of unleashing a second wave of new infections and a return to lockdowns.

Economists believe the economy entered a recession in the second half of March when the social distancing measures took effect.

"The virus has done a lot of damage to the economy, and there is just so much uncertainty now," said Mark Zandi, chief economist at Moody’s Analytics.

Zandi said he thought the economy could resume its growth in the July-September quarter before faltering in the final quarter of 2020 and then regaining its footing on a sustained basis in mid-2021 – assuming that a coronavirus vaccine is ready for use by then.

"I would characterize this period as going through quicksand until we get a vaccine," Zandi said.

The Trump administration takes a rosier view. Trump told reporters this week that he expects a "big rise" in GDP in the third quarter, followed by an "incredible fourth quarter, and you’re going to have an incredible next year."

The president is predicating his reelection campaign on the argument that he built a powerful economy over the past three years and can do so again after the health crisis has been resolved.