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The US Economy contracted 3.5% in all of 2020

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Globe Live Media, Thursday, January 28, 2021

The U.S. economy grew at an annual rate of 4% in the last three months of 2020, but caught in the grip of a viral pandemic, it contracted 3.5% over the entire past year, the largest ever amount in 74 years.

For 2020 as a whole, a year in which the coronavirus inflicted the worst economic freeze since the end of World War II, the contraction in the economy clouded the outlook for this year. Economic damage followed the outbreak of the pandemic 10 months ago and the deep recession it triggered, with tens of millions of Americans out of work.

In a report released Thursday, the Commerce Department calculated that the nation’s gross domestic product – its total output of goods and services – slowed sharply in the October-December quarter compared to a record rise of 33, 4% in the quarter from July to September. That gain followed a record 33.4% annual drop during the April-June quarter, when the economy fell sharply.

 

The pandemic’s blow to the economy early last spring ended the longest economic expansion on record in the United States, nearly 11 years. Damage from the virus caused GDP to contract at an annual rate of 5% in the January-March quarter of last year. Since then, thousands of businesses have closed, nearly 10 million people are still out of work, and more than 425,000 Americans have died from the virus.

The government report showed that consumer spending, which accounts for about 70% of the economy, slowed dramatically last quarter to an annualized gain of 2.5% compared to the 41% increase in the July-September quarter. , when the economy showed a powerful initial rebound. Instead, the last quarter’s economy was driven in part by business investment and housing, which has performed stellarly over the past year, reflecting record mortgage rates and a demand for more home space. During the last quarter, housing grew at an annual rate of 33.5% and business investment at a rate of 13.8%.

Ben Oakley
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