The U.S. Economy Will Suffer The Biggest Recession Since World War Ii In 2020
2021-01-28 | by CusiGO
The US Federal Reserve’s pessimistic forecast of slowing economic recovery released yesterday, together with the annual GDP data for 2020 released on Thursday, is the worst result since 1946 after the Second World War: the economy shrank by 3, According to a preliminary estimate by the Department of Commerce, the U.S. economy grew by 5% as a result of the covid-19 crisis. Pandemics are synonymous with recession; GDP is a barometer of unprecedented destruction in peacetime.
After 128 months of growth, the US economy fell into recession in February 2020, with a 4% recovery in the fourth quarter of last year, according to the annual indicators used by the US. However, this figure is lower than analysts’ expected growth rate of 4.4%. Taking into account the indicators used by other countries, the growth rate from October to December was 1%. Unemployment dropped by 10 million, with an unemployment rate of 6.7%, a large number of small businesses closed and inequality rampant. This is a remarkable feature of the year. In this year, with two new waves of coronavirus in the country, the forecast has become blurred.
The commerce department stressed that the decline in GDP in 2020 reflected the contraction in household spending, exports, private investment in non residential areas, as well as the decrease in local and state government spending, partially offset by the increase in federal government spending. Last year, exports fell by 13%, and personal consumption fell by 3.9%. These preliminary data will be reviewed in a further assessment on 25 February.
This is the first time the annual growth rate has shrunk since the Great Depression of 2009, when the economy shrank by 2.5%. This has nothing to do with the reduction in 1946, which was 11.6%, due to the post war demobilization. In any case, the economic performance in 2020 is ups and downs, from the collapse in spring, which coincides with the first wave of the pandemic, to the rebound in summer, with an increase of 7.4%, which coincides with the re opening of economic activities, The US Federal Reserve warned on Wednesday that the economy slowed in the fourth quarter due to the direct impact of the second and third waves of the health care crisis.
With the virus still out of control in most parts of the country, economists expect negative economic growth in the first quarter of this year, and before the final rebound in the summer, thanks to the $1.9 trillion stimulus promised by the Joe Biden government, Vaccination rates will generally increase and most Americans will be able to get them. According to the new government, collective immunity will come into effect in the summer. After the two stimulus plans approved in 2020, direct aid to households and small and medium-sized enterprises will also receive attention. The benefits of the former ran out in the last quarter of last year, while the Biden administration condemned that when the White House relay took place in the third week of January, most of the latter’s aid had not yet reached the beneficiaries.
Consumption fell in the last quarter of 2020 due to the virus and Congress’s delay in approving the latest aid plan, tarnishing the good performance of the only sector with positive data, Manufacturing and construction: the sectors most affected by the epidemic and its resulting partial or total closures are services, especially the most unstable workers (mainly women and members of communities such as Latin American and African American).