The record-long U.S. economic expansion is over after almost 11 years, with the deepest recession in at least eight decades now under way.

The world’s largest economy shrank at a 4.8% annualized pace in the first quarter, the biggest slide since 2008 and the first contraction since 2014, as the need to fight the coronavirus forced businesses to close and consumers to stay home.

The current quarter is likely to be far worse, with analysts expecting the economy to tumble by a record amount in data going back to the 1940s. Bloomberg Economics has projected a 37% annualized contraction, but UniCredit is the most bearish with a 65% estimate.

The first-quarter downturn, reported Wednesday by the Commerce Department, was led by the steepest drop in consumer spending since 1980 and the fastest decline in business investment in almost 11 years.

The worse-than-expected report reveals the wide-scale hit to U.S. output from Covid-19 and the subsequent freezing of economic activity.

“It’s kind of incredible when you think about the fact that the economy was running pretty much on a normal footing for over 80% of the first quarter,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said on Bloomberg Radio.

U.S. stock futures gained amid renewed hopes for a drug to fight the coronavirus, helping investors shrug off the GDP data. The dollar slipped and Treasuries edged higher.

Crisis, Recovery
The report indicates an end to an expansion that began in mid-2009 when the economy began to recover from the financial crisis. Since then, gross domestic product swelled by $7 trillion and unemployment had fallen to a five-decade low of 3.5%, although some have questioned how widely the benefits have been spread with an increasing concentration of wealth at the top and wages rising at a relatively tepid pace for most of the expansion.

The pain is being felt worldwide with China already reporting a sharp decline in output and the euro-area set to deliver grim figures Thursday.

As the U.S. government and states debate when and how fast to lift restrictions on companies and schools, there remains considerable doubt over the duration of the economic slowdown and the shape of the recovery.

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