2020 worst year for US economy since WWII
Virus pandemic walloped workers and businesses in second quarter
The U.S. economy shrank by 3.5% last year as the novel coronavirus upended American business and households, making 2020 the worst year for U.S. economic growth since 1946.
Economic growth slowed in the fourth quarter, rising just 1% from the previous quarter, according to the Bureau of Economic Analysis. That’s equivalent to an annualized rate of 4%.
It is the first time the economy has contracted for the year since 2009, when gross domestic product shrank by 2.5% during the depths of the Great Recession. It is also the worst year for economic growth since 1946, when the economy shrank by 11.6% as the nation demobilized from its wartime footing.
This is the last GDP report from former president Donald Trump’s tenure. Until the pandemic, Trump was on track for an economic record that put him near the middle of the pack among recent presidents. But the COVID-19 crisis has ensured that he is likely to have overseen the slowest economic growth of any president in the period since the Second World War.
Economic chaos reigned in 2020. In the second quarter, gross domestic product contracted at the fastest quarterly rate ever for the U.S., as the pandemic walloped workers and businesses and kept millions from leaving their homes. Then, in the third quarter, GDP soared at a record pace as parts of the economy reopened and businesses brought workers back onto their payrolls.
The economy was buoyed by a rebound of sales of automobiles and household goods such as furniture, and in renovations and supplies for home offices. Consumer spending — which accounts for more than two-thirds
of U.S. economic activity — used to be driven by an ever-growing demand for services, including leisure and hospitality, and restaurants and bars.
But as the pandemic warped triedand-true shopping habits, economists watched consumers move their spending from services to goods. Purchases of computers, home office equipment and fire pits quickly overtook those of hotel rooms and movie tickets.
But for every business that has thrived in the era of social distancing, dozens of others have continued to suffer as customers stay home and governments restrict activity at high-contact businesses such as bars, restaurants and event centers.
Federal Reserve Chair Jerome Powell said Wednesday there is “nothing more important to the economy right now than people getting vaccinated.” Powell said the pace of the recovery in economic activity and employment has moderated in recent months, with service-sector workers — mainly women and people of color — struggling to regain a foothold in the workforce.
“That is really the main thing about the economy, is getting the pandemic under control, getting everyone vaccinated, getting people wearing masks and all that,” Powell said.