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US Economy Takes Corona Hit

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 8, 2019. REUTERS/Brendan McDermid

New orders for US manufactured goods cratered in April by 17.2 percent as the COVID-19 pandemic shut down factories nationwide, the Commerce Department reported Thursday.

That decline came after a 16.6 percent drop in March, taking sales down to $170 billion in April from $246 billion before the virus hit the world’s largest economy.

Excluding transportation, sales fell just 7.4 percent, according to the data, but transportation orders collapsed by more than 47 percent after the 43 percent plunge in March.

Struggling aerospace giant Boeing, a key part of the transportation sector, reported 31 orders in March and none in April. The company, which announced it is slashing its workforce by 10 percent and reducing production, plans to restart its Seattle-area factory next week.

Meanwhile, sales of motor vehicles and parts collapsed nearly 52.8 percent compared to March.

While manufacturing is a much smaller, though still important, part of the services-dominated US economy, it still has a heavy weight in measuring GDP.

“Further evidence of the ravaging damage from the global coronavirus recession was visible” in the data, Gregory Daco of Oxford Economics said in an analysis.

In a separate report, the Commerce Department said US GDP fell 5.0 percent in the first three months of the year, slightly worse than the 4.8 percent drop originally reported, putting an end to a decade of economic expansion.

The report pointed to the collapse in consumer spending, hotels, food service and transportation equipment, as well as exports.

The fall was more dramatic given that the business shutdowns did not start to take effect until the final two weeks of the quarter, and government economists could not separate out the impact of the virus on the data.

But Federal Reserve Chair Jerome Powell said the collapse in the April-June quarter could be as bad as 30 percent, levels not seen since the Great Depression of the last century.

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S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.