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Tuesday, June 2, 2020
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Record collapse

Never before has an economic catastrophe hit so hard, so fast. The U.S. gross domestic product — the broadest measure of economic output — will collapse from April to June in what is sure to be the ugliest quarter ever captured in Commerce Department records dating to 1947. The cause is no mystery: To combat the coronavirus outbreak, businesses have closed, flights have been cancelled and Americans have isolated themselves at home, bringing economic life to a near-standstill. Capital Economics expects the U.S. economy to plummet at a 40% annual pace in the second quarter. How bad is that?
The previous record for an economic free-fall was set in 1958. In the first quarter of that year, GDP plunged at a 10% annual pace in a short but nasty downturn. Economists blame tight-fisted policy by the Federal Reserve and cuts in defense spending for the eight-month 1957-1958 “Eisenhower Recession.” But in a report last month, Alambic Investment Management noted another, familiar-sounding “major culprit’’: The Asian Flu, which surfaced in Singapore in February 1957, and ultimately killed about 116,000 people in the United States and 1.1 million worldwide.