Data: Bureau of Economic Analysis; Chart: Axios Visuals

The U.S. economy shrank by an annualized 4.8% in the first quarter, the government said on Wednesday.

Why it matters: It's the biggest quarterly drop in over a decade and shows the beginning of an economic slowdown that's expected to get worse as the coronavirus roils the economy. Economists are bracing for current quarter figures, with some projecting a record annualized decline of about 40%.

What they're saying: The coronavirus 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 Commerce Department said in a release.

By the numbers: The biggest drag was the sharp drop in consumer spending, which makes up about 70% of U.S. economic activity.

  • It fell 7.6%, the most since 1980, per Bloomberg.
  • And business investment, which had already been sluggish in recent months, showed a quarterly drop of 8.6%.

Between the lines: The data is even worse "when you consider that the first two months of the first quarter were relatively normal and this number only includes the March lockdowns," Chris Zaccarelli of the Independent Advisor Alliance wrote in a note to clients this morning.

  • GDP estimates for the current quarter are dismal. At worst, economists say it could shrink by an annualized 41%, per FactSet.

The bottom line: The economy is undeniably in a recession, though official data is slow to confirm that. The Q1 contraction shows the beginning of the damage.

  • Economists are debating how quickly the U.S. economy will rebound as states begin to open back up.

Go deeper

Pew: Record 52% of young adults in U.S. are living with their parents

Illustration: Eniola Odetunde/Axios

A higher percentage of young adults in the U.S. are living with their parents now than they were at the end of the Great Depression, according to Pew Research data released Friday.

Why it matters: The data suggest that the economic uncertainty and continuing unemployment brought on by the coronavirus pandemic are pushing more young adults to move in with their parents.

Updated 9 hours ago - Health

World coronavirus updates

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Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Prime Minister Jacinda Ardern announced all domestic pandemic restrictions will be lifted in New Zealand from midnight Monday except in Auckland, where they'll be eased late Wednesday.

The big picture: Ardern delayed the country's election until Oct. 17 as authorities work to stamp out a coronavirus cluster in Auckland, after the re-emergence of COVID-19. There have been single-digit or zero domestic cases in NZ's most populous city since the government reintroduced restrictions.

Erica Pandey, author of @Work
Sep 4, 2020 - Economy & Business

Hotel crisis hits new milestone

Illustration: Sarah Grillo/Axios

Labor Day weekend traffic might be a touch lighter this year, with hotel bookings down 65% compared to last year.

Why it matters: America's hotels are on life support as the coronavirus pandemic drags on, with hundreds of billions of dollars in revenue and some 2 million jobs at stake.