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Mass. GDP shrunk by more than 6% in the first quarter, report says

Globe staff

ECONOMY

Mass. GDP shrunk by more than 6% in the first quarter, report says

The Massachusetts economy shrunk at a 6.1 percent annualized rate in the first quarter of the year but the damage from the pandemic is likely far worse, according to a new estimate offered by local economists who edit the MassBenchmarks report. It compares to an estimated 4.8 percent decline in gross domestic product nationwide over the same time period. Both the state and national economies grew by an annualized rate of just over 2 percent in the final three months of 2019. The MassBenchmarks economists said those national and state estimates for the first quarter don’t fully reflect the severity of the pandemic-induced downturn, in part because the recession didn’t begin until the middle of March. Alan Clayton-Matthews, a Northeastern University professor and MassBenchmarks senior editor, noted that 650,000 people filed unemployment claims in Massachusetts between March 15 and April 18. That number implies roughly 20 percent of the labor force was unemployed or on furlough as of mid-April. With that in mind, Clayton-Matthews expects the decline in gross state product to be at least 25 percent in the second quarter, which would be the worst on record. — JON CHESTO

PANDEMIC

Maine company making virus testing swabs teams up to double production

A Maine company that makes specialized swabs for coronavirus testing is teaming up with construction company Cianbro and Navy shipbuilder Bath Iron Works to double production, officials said Thursday. The Trump administration is providing $75.5 million to Guilford-based Puritan Medical Products through the Defense Production Act to boost production of the swabs, which are needed to ramp up testing. Cianbro is providing a building in Pittsfield and help setting up the production line, and Bath Iron Works is making 30 machines Puritan needs to increase production, company officials said Thursday. Thanks to the partnership, Puritan’s production will double to 40 million of the swabs per month, said Senator Susan Collins, a Maine Republican, who praised the “can do spirit” exhibited by the collaboration. The effort will create as many as 150 jobs in Pittsfield on top of the 300 to 500 workers already employed by Puritan in Guilford, officials said. The swabs that are produced by Puritan for coronavirus testing are longer than most swabs and have a synthetic material on the end. They’re used for nasal swabs for tests for the coronoavirus. — ASSOCIATED PRESS

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BROADBAND

Comcast’s income drops as cord-cutting continues

Comcast’s net income slid in the first three months of the year as the coronavirus pandemic forced it to shut down its theme parks and its movies were kept out of shuttered theaters. Comcast also reported Thursday that it lost 409,000 cable TV customers, the biggest source of the company’s profits, as cord-cutting accelerated. That’s already more than half the 671,000 customers it lost in all of 2019. But it added 477,000 internet customers, which it said was its best quarterly number in more than a decade. It came as US workplace shutdowns began in March and a mass work-from-home migration underscored the role home internet plays in Americans’ lives. Americans are increasingly opting for cheaper streaming video providers that are delivered over the internet, like Netflix, which both benefits and harms Comcast’s business as an internet and traditional TV provider. Competition in online video is also increasing with new entrants like Disney and Apple. Comcast’s own streaming service, Peacock, will launch nationwide in July, with free and paid versions. — ASSOCIATED PRESS

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MORTGAGES

Rates fall to record lows

Long-term mortgage rates tumbled to all-time lows this week as the economy and housing market continued to reel from the business and social shutdown spurred by the coronavirus pandemic. The average rate on the benchmark 30-year home loan fell to 3.23 percent, the lowest level since mortgage buyer Freddie Mac started tracking rates in 1971. That was down from 3.33 percent last week and 4.14 percent a year ago. The average rate on the 15-year fixed-rate mortgage dropped to 2.77 percent from 2.86 percent last week, Freddie Mac reported Thursday. — ASSOCIATED PRESS

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AVIATION

American Airlines loses $2.24b in the first quarter

American Airlines reported a staggering loss of $2.24 billion for the first quarter, when the coronavirus pandemic triggered a sharp drop in air travel. The airline’s revenue fell 19 percent while costs continued to rise even as the virus spread. The situation facing the airline industry has grown more dire since the first quarter ended. Air travel within the US has plunged 95 percent from a year ago, judging by the number of people screened at the nation’s airports. American’s massive loss compared with a profit of $185 million in the same quarter last year. American said that adjusted for non-recurring items, it lost $2.65 per share. That was worse than the average forecast of a $2.08 per share loss from 15 analysts surveyed by FactSet. American estimated that it ended March with $6.8 billion in cash and other liquidity, including $2 billion that it raised during the first quarter, and will have $11 billion at the end of June. The Fort Worth, Texas-based airline has cut its flying schedule by 80 percent in April and May and 70 percent in June. It has grounded hundreds of planes. Nearly 39,000 employees have accepted early retirement, partially paid leave or fewer hours of work. Cheaper fuel caused by the collapse in energy prices will contribute to a reduction of more than $12 billion in its 2020 spending, the airline said. — ASSOCIATED PRESS

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SOCIAL MEDIA

Twitter struggles with advertising slump caused by pandemic

Twitter’s stock tumbled Thursday after the company failed to show that it’s weathering the pandemic-borne digital advertising slump the same way its bigger rivals Facebook and Google are. The San Francisco-based social company’s higher expenses outweighed its revenue growth in the first three months of the year, leading to a loss of $8.4 million. And when asked during a conference call how April looked in terms of revenue, executives pointed back to the second half of March — when advertising declined. Facebook, in contrast, said on Wednesday that after a March decline, it saw “signs of stability” in the first three weeks of April. And it said ad revenue during that period has been flat compared with the year-ago period. Google parent company Alphabet also posted results this week that didn’t look “quite as bad as some people had feared,” said Edward Jones analyst David Heger. All three companies are seeing an increase in usage, since the virus outbreak has forced people to stay at home. Twitter reported that average daily users grew 24 percent year over year, the highest growth rate in the company’s history. Twitter has added 14 million daily users since the previous quarter. — ASSOCIATED PRESS

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