Home Business U.S. economy has entered the “waiting room”, the worst performance in 74 years.
U.S. economy has entered the "waiting room", the worst performance in 74 years.

U.S. economy has entered the “waiting room”, the worst performance in 74 years.

by YCPress

January 29 – The first estimate data released by the U.S. Department of Commerce on the 28th showed that the real GDP of the United States increased by 4% in the fourth quarter of 2020 at an annual rate, but the economy contracted by 3.5% for the whole year.

The news “swipe the screen” in foreign media on the same day, and many foreign media said that this was the worst performance since 1946.

The U.S. economy is still in a “waiting room”, which casts a shadow on the economic outlook for the coming year.

“Worst in 74 years”

U.S. GDP data (Reuters)

After analyzing the data, the Associated Press pointed out that this is the first year-round contraction of the U.S. economy since 2009 and the worst performance since 1946. The U.S. economy has fallen into recession since February 2020.

Although it rebounded in the second half of the year, it has contracted throughout the year.

“Last year’s economy was very bad,” a professor of finance and economics at Loyola Marymount University in Los Angeles told Reuters. “This is the first service industry has seen a recession in recent years, and there’s a lot of job losses.”

The coronavirus pandemic has hit the service industry hard, leaving millions of Americans out of work and into poverty, Reuters said. According to a report released by the U.S. government on the 28th, although the number of first-time jobless claims fell last week, it remained at an all-time high of 847,000.

Previously, even during the Great Depression, the number of people applying for unemployment benefits per week had never exceeded 700,000.

According to the New York Times, governors and mayors imposed restrictions on restaurants, bars and businesses, public health officials discouraged holiday travel, consumer activity plummeted, and personal consumption spending, which accounted for more than two-thirds of the U.S. economy, plummeted by 3.9%, the worst chart since 1932, according to the New York Times.

Now. In addition, trillions of dollars of federal government relief funds gradually ran out in the second half of the year, and personal income fell in the fourth quarter.

The foreground is shadowed.

“The 2020 data cast a shadow over the economic outlook for the U.S. in the coming year.” Economists warned that unless vaccines are distributed and used nationwide and the rescue plan formulated by the government is universal, the economic recovery will be unsustainable, the Associated Press said.

This process may take months, during which millions of Americans still have to continue to struggle. “If the health does not improve, the economic situation in the United States will not improve at all,” said Dakota, chief economist of the Oxford Institute of Economics.

Reuters said that U.S. policymakers are pinning the economy on the rise in vaccinations, but real-time data show that the recovery is still at the starting line and the U.S. economy is in a “waiting room”.

The U.S. vaccination program has been “stumbling” and more than a month after the plan was implemented, only 24.6 million of the country’s 330 million residents have been vaccinated with a single dose and only 3.8 million have been vaccinated with two doses, which is too early to reach the target immunization level.

With vaccine distribution difficult and the lockdown still unresolved, economists expect the U.S. economy to slow further in the first quarter of 2021 and undoubtedly be full of challenges in the coming months.

High inequality

U.S. Unemployment Benefits Application Index (Reuters)

“In the epidemic, the economic recovery of the United States is also highly unequal.” According to The New York Times, many white-collar workers keep their jobs, can work from home, and store their savings by reducing vacations and eating out.

Richer households also benefit from house prices and stock market rises.

However, low-income service workers, especially African and Hispanic people, are suffering from the double impact of unemployment and the virus.

School closures have forced millions of parents to leave work, especially mothers, and many have difficulty returning to work.

Reuters believes this has led to the so-called “K-shaped recovery”, in which the higher-income perform well while the low-income group is at a disadvantage.

The poverty rate in the United States increased by 2.4 percentage points and the number of people living in poverty increased by 8.1 million by the second half of 2020, according to a survey conducted last week by professors at the University of Chicago and Notre Dame.