In biggest contraction since 1946, US economy shrinks 3.5% in 2020

In the biggest contraction in US’ history since 1946, its economy contracted by 3.5% last year as the COVID-19 pandemic shut down large sectors of business and daily life. The Commerce Department, in a statement, said the net exports fell 13% last year while personal consumption expenditures dropped 3.9%.

The contraction reflected the drop in spending as well as in “exports, private inventory investment, nonresidential fixed investment, and state and local government that were partly offset by increases in federal government spending and residential fixed investment,” the report said.

For the fourth quarter alone, GDP grew by an annual rate of 4.0%, according to the first estimate for the final three months of the year.

Compared to the July-September period, the measure used in most other countries, fourth quarter growth was just 1.0%, the report said.

That followed the record 7.5% rebound in the third quarter, and the record 9.0% drop in the April-June period.