The U.S. has the largest economy in the world. Nonetheless, even for the U.S., the pandemic caused a lot of issues. It is worth noting that, the country’s economy grew at an annualized and seasonally adjusted rate of 4% in the fourth quarter of 2020. However, that result did not make up for a really bad first quarter as well as a historically awful second quarter of the year.
People should keep in mind that, for 2020 as a whole, GDP (gross domestic product) declined by 3.5% from a prior year. Unfortunately, that was the worst decline since 1946.
It is worth mentioning that, the GDP fell for the first time since 2009 when it declined 2.5% during the financial crisis.
Interestingly, if it wasn’t for the current crisis, a 4% quarterly growth rate would a great result. Nevertheless, the U.S. is still far from its pre-pandemic economic glory. As a result, this pace of growth won’t be enough to solve the problems.
As a reminder, the U.S. GDP stood at 20.9 trillion at the end of 2020, compared with 21.4 trillion the year before.
Importantly, GDP shrank a record 31.4% on an annualized basis between April and June following the initial lockdowns. Hopefully, in the following three months, economic activity grew at an annualized and seasonally adjusted rate of 33.4%, but it was not enough to cope with losses.
U.S. Economy in 2021
The new administration should cooperate with lawmakers to boost the economy. Interestingly, Federal Reserve Chairman Jerome Powell reiterated his position on Wednesday. According to Powell, the recovery of the U.S. economy is dependant on the path of the virus. Unfortunately, the pandemic is not over yet. Communities across the country remain under varying lockdown protocols to help limit the spread of the disease, which affects economic activity.
Moreover, millions of people in different parts of the country are still looking for a job. Importantly, the pandemic decimated various industries. Hotels, restaurants, and other businesses suffered huge losses.
It is worth mentioning that, conditions might not change very much in the first quarter of 2021. However, things should get better as the vaccine has the ability to change the situation for the better in the coming months. Despite all challenges, the world’s largest economy has the potential to deal with most of the issues in the foreseeable future.