The Cvoid-19 pandemic significantly life-saving financing lifeline in eth United States in 2020 along with investments in business resulting in the largest economy of the world posting a contraction for the year that was the deepest since World War II.
This was reflected in millions of Americans being thrown out of work and into poverty.
While there is an economic recovery currently underway, it was slowed down towards the end of the year because of a resurgence of the pandemic in and expending of almost exhaustion of $3 trillion from the government exchequer in the form of stimulus money to fight the pandemic and its economic hit.
The moderation is likely to persist at least through the first three months of 2021.
One of the critical factors for the US economy to bounce back is the successful distribution of Covid-19 vaccine. An economic recovery path worth $1.9 trillion has been chalked out by president Joe Biden. But the huge size of the package has put off some of the some lawmakers as this package comes close on the heels of the Trump administration providing an almost $900 billion stimulus package in late December,
The urgency for Congress to pass Biden’s plan was underscored by the report from the Commerce Department on Thursday (Jan 28), said White House economic adviser Brian Deese while also warning that the cost of doing nothing was too high.
“Without swift action, we risk a continued economic crisis that will make it harder for Americans to return to work and get back on their feet,” said Deese.
There was a 3.5 per cent decrease in the country’s GDP in 2020 which was the highest drop for the economy since 1946. The largest economy of the world had reported a growth of 2.2 per cent in the previous year. The 2020 annual contraction was the first decline for the economy since the 2007-09 global financial meltdown.
In 2020, there was contraction in every sector of the economy apart from government and the housing market. There was a 3.9 per cent fall in consumer spending in the year which makes up more than two-thirds of the economy. This drop in consumer spending was the steepest since 1932. The economy was pushed into recession last February.
The economy also reported a 4 per cent annualised rate for the fourth quarter because of delays by the government to offer another stimulus package as well as fresh disruptions to business because of resurgence of the pandemic. In contrast the economy had reported a historic 33.4 per cent growth during the third quarter. But the hit in the fourth quarter to the economy resulted in its GDP going down by 2.5 per cent compared to was it was at the end of 2019.
According to analysts and economists, the American economy will return to its pre pandemic levels only by the second quarter of the current year.
(Adapted from StraitsTimes.com)