The US economy suffers in 2020 the biggest drop since World War II

A woman calls for increased unemployment assistance during a protest in Las Vegas (USA) in August 2020.BRIDGET BENNETT / AFP

Added to the gloomy forecast of the US Federal Reserve on the slowdown in the economic recovery, made public yesterday, is the annual GDP data in 2020, with the worst result recorded since 1946, immediately after World War II: a 3.5% contraction of the economy due to the impact of the COVID-19 crisis, according to a preliminary estimate by the Department of Commerce.

The pandemic as a synonym for recession;

GDP as a barometer of unprecedented devastation in peacetime.

After entering recession in February 2020, after 128 months of growth, in the fourth quarter of last year the economy experienced a recovery with growth of 4%, according to the annualized indicator used in the United States.

The figure, however, is lower than expected by analysts, who expected growth of 4.4%.

If the indicator used by other countries is taken into account, the growth between October and December was 1%.

Job losses - ten million fewer jobs and an unemployment rate of 6.7% -, massive closures of small businesses and rampant inequality are hallmarks of a year in which forecasts were tarnished as that two new waves of the coronavirus loomed over the country.

The Department of Commerce emphasizes that the fall in GDP in 2020 reflects contractions in household spending, exports, non-residential private investment and a reduction in spending by local and state administrations, partly offset by increases in items of the federal government.

Exports fell 13% last year and personal consumption fell 3.9%.

These preliminary data will be reviewed in a new evaluation on February 25.

It is the first time that annual growth has contracted since 2009, in the Great Recession, when the economy shrank 2.5%.

Certainly nothing to do with the reduction in 1946, which was 11.6% due to the demobilization that followed the war.

In any case, the behavior of the economy in 2020 has been marked by ups and downs, from the collapse of the spring, coinciding with the first wave of the pandemic, to the rebound of the summer, with a growth of 7.4% that coincided with the reopening of economic activity, and the slowdown in the last quarter of which the Federal Reserve was warning this Wednesday, as a direct effect of the second and third waves of the health crisis.

With the virus still out of control in much of the country, economists expect economic growth to remain negative in the first quarter of this year, before an eventual rebound for the summer, as stimulus from the government of Joe Biden, who has promised aid worth 1.9 billion dollars, and the rate of vaccination is generalized and reaches a majority of Americans.

According to the new Administration, herd immunity will have been achieved by summer.

It will also be noticed in direct aid to homes and SMEs, after the two stimulus programs approved in 2020. The benefits of the first were exhausted precisely in the last quarter of last year, while, according to the Biden Administration, a good part of the aid of the latter had not yet reached its beneficiaries when the relief took place in the White House, the third week of January.

The contraction of consumption in the last quarter of 2020, as a result of the virus and the delay in the approval of the last aid plan by Congress, has clouded the good performance of the only sectors that have yielded positive data, manufacturing and construction.

The sector most affected by the pandemic and the consequent partial or total closures of activity has been that of services, and especially the most precarious workers (mostly women and members of communities such as Latinos and Afro-Americans).