According to the Commerce Department’s initial estimate of 2020 fourth quarter economic growth, the U.S. economy grew 4 percent, but real GDP declined 3.5 percent over the year due largely to the coronavirus pandemic. NAFCU Chief Economist and Vice President of Research Curt Long noted that “this is the first annual decline since the Great Recession and the largest since 1946.”
“While most measures declined versus last year, residential investment was a notable exception, rising 5.9 percent,” said Long in a new NAFCU Macro Data Flash report. “Spending on goods was also strong, but services consumption collapsed. It is likely that growth slowed over the course of the fourth quarter, as rising COVID cases led to stricter social distancing, culminating in the loss of 140,000 jobs in December.
According to the new estimate, contributions to growth of real GDP came from personal consumption (+1.7 percent) – with the entire gain coming from the services sector – and investment (+4.1 percent). Growth was reduced by net exports (-1.5 percent) and government consumption (-0.2 percent).
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