The U.S. Economy Grew in the 4th Quarter, But Shrank in 2020
January 28, 2021
Economic growth in the year’s end was not enough to make up for the pandemic’s impact earlier in the year, leaving GDP down for the year. On a year-over-year basis, the economy contracted 3.5% last year. This is the first annual decline since 2009, when the country was emerging from the financial crisis, and the largest since the end of World War II.
Gross domestic product grew at an annual rate of 4% during the fourth quarter, according to the Commerce Department. This is slightly below the 4.3% growth economists had forecast.
Consumer spending, which accounts for two-thirds of total economic activity, grew at a rate of 2.5%, a substantial slowdown from the third quarter, as consumers spent less amid increasing coronavirus numbers and business restrictions. Overall spending on goods also declined.
Economists expect a robust economic rebound in 2021, as additional stimulus generates economic activity and the vaccine rollout allows normal business to resume. The International Monetary Fund estimates 5.1% GDP growth this year.