Drug Hopes Overshadow GDP
Market Crumbs | Apr 30, 2020 07:52AM ET
Yesterday the U.S. Commerce Department released the widely-anticipated first quarter GDP data.
As expected, the U.S. economy contracted in the first quarter as GDP fell 4.8% . It was the first negative GDP print since the first quarter of 2014 when GDP fell 1.1%. The nearly 5% drop in GDP in the first quarter marks the worst GDP reading since the fourth quarter of 2008 when GDP fell 8.4%.
Consumer spending, which makes up more than two-thirds of U.S. economic activity, fell 7.6% in the first quarter. The drop in consumer spending marked the largest quarterly drop since the second quarter of 1980.
The Commerce Department's Bureau of Economic Analysis cited shelter-in-place orders as negatively affecting GDP for the quarter, saying they "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."
As bad as all of that sounds, markets soared yesterday as Food and Drug Administration is in talks with Gilead to make remdesivir available to COVID-19 patients.
"As part of the FDA’s commitment to expediting the development and availability of potential COVID-19 treatments, the agency has been engaged in sustained and ongoing discussions with Gilead Sciences regarding making remdesivir available to patients as quickly as possible, as appropriate," an FDA spokesperson said.
For the sake of humanity, hopefully remdesivir is as effective as the markets are interpreting it to be.
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