FEBRUARY 1, 2021 – US ECONOMY SHRINKS IN 2020
For the first time since the financial crisis, the US economy shrank for the year; 2020 was the worst year economically since World War II. The good news is that rapid growth was seen in the fourth quarter which is expected to continue into 2021.
Year over year, the economy contracted 3.5 percent in 2020, and the economy was down 2.5 percent from the fourth quarter of 2020 versus 2019. Q4 2020 GDP grew at a 4 percent annualized rate after a record shattering Q3 growth of 33.4 percent annualized. Economists believe growth will improve once the pandemic gets under control.
Consumer spending in the fourth quarter, which contributes to two-thirds of US economic output, came in at 2.5 percent, down from 41 percent in Q3. Stimulus checks from the government in December, expected further government stimulus in 2021, a high saving rate and vaccines should all help the economy get back on its feet over the course of the coming months.