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2020 Economy Worst Since World War II

GDP fell by 3.5%, though final quarter showed growth
By John Johnson,  Newser Staff
Posted Jan 28, 2021 8:24 AM CST
2020 Economy Was Worst Since World War II
In this July file photo, a closed sign hangs in the window of a barbershop in Burbank, Calif.   (AP Photo/Marcio Jose Sanchez, File)

(Newser) – The final report on the 2020 economy is in, resulting in bleak historical comparisons but also hope for a better 2021. In terms of the specific numbers, the economy grew by 4% in the final quarter of the year, below estimates of 4.3%, reports CNBC. For the full year, that means the economy—as measured by gross domestic product—shrank 3.5%. Coverage:

  • Comparisons: The economy's yearly decline of 3.5% is the worst in 74 years, reports the AP. In 1946, the mark was 11.6%, thanks to the end of World War II. The 2020 decline is the first since a fall of 2.5% in 2009, during the Great Recession. The worst ever was 12.9% in 1932, during the Great Depression.
    Context: All in all, given the pandemic and unprecedented political turmoil, "the economy closed in fairly good shape," writes Jeff Cox of CNBC. “There has been a broad recovery, but economically speaking, we’re not out of the woods yet,” is how Ben Herzon of IHS Markit puts it to the Washington Post.
  • On the horizon: Economists expect sluggish growth to continue in the early part of this year before picking up later if vaccines get the pandemic under control, reports the Wall Street Journal. “Coming out of the disaster of the pandemic, we’re going to see outsized growth from the second quarter onwards and a sharp decline in joblessness,” says Joseph Brusuelas of RSM US LLP. Two estimates cited in the story predict annual growth of 4% or 5% in 2021.
  • Relatively stable: The figure of 4% in the final quarter follows wild swings earlier in the year. GDP contracted 31.4% in the second quarter before rebounding by a record 33.4% in the third, notes CNBC.
(Read more economy stories.)

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