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Trump's final economic report could be disappointing

2021-01-28T15:35:07.109Z


The GDP of the United States is forecast to have grown at an annualized rate of 4% last quarter, something that would not be good for Trump


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New York (CNN Business) -

Economists are rating the economy on a curve.

That's not good if you are former President Donald Trump.

The United States' gross domestic product, the broadest measure of economic activity, is forecast to have grown at an annualized rate of 4% between October and December.

In a normal year, that would be something to celebrate: an A + on Trump's final economic report.

But 2020 was not a normal year.

The United States is still reeling from the worst economic shock in living memory.

GDP contracted a record 31.4% on an annualized basis in the second quarter.

Although it grew again at a record annualized rate of 33.4% in the third quarter, that was not enough to offset the damage already done.

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So if 33.4% isn't good enough, 4% sure won't be either.

It would bring the nation only a small part back to its pre-pandemic strength, underscoring how far we still have to go.

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It also does not bode well for recovery in 2021. The recovery of the United States economy was affected in the final quarter of 2020 when COVID-19 infections spiked and several states reimplemented lockdown measures.

A bad sign for the 2021 economy

President Joe Biden inherited a sick recovery and a broken job market.

The new government will need a hands-on approach to get the economy back on track this year after the pandemic put it on the brakes.

Rising infections and renewed restrictions on individuals and businesses dampen hopes of recovery in the winter months.

The first quarter of 2021 "is likely to be even weaker and there is little reason to expect a sudden spike in activity until restrictions by covid are significantly eased," said James Knightley, chief international economist at ING, even if there is more help for the unemployed.

Biden will first have to control the pandemic so that the recovery is on the right track.

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What is holding back the US economy?

Economists have been concerned about the state of the recovery for a while.

Rising covid-19 infections in the fall and a renewed surge in weekly claims for unemployment benefits signaled another slump for the economy in the winter.

On the consumption and spending front, retail sales posted three consecutive months of no growth between October and December as big shopping events like Black Friday and Christmas did not provide adequate boost.

And the consumer confidence index, based on surveys from the University of Michigan, was still well below its pre-pandemic level and declined again after its most recent peak in October.

Millions of Americans remain unemployed due to the crisis, and in December the economy cut 140,000 jobs, a major setback for the recovery.

It was the first net job loss since April.

The US economy is built on consumer spending and as long as Americans don't spend the way they used to, be it because of unemployment, lockdown orders, or simply precaution, it will keep the pace of recovery slow.

The launch of vaccines and the ultimate control of the virus is what will really transport the economy back to its pre-pandemic strength, economists believe.

But, so far, only about 23.5 million doses of coronavirus vaccines have been administered in the United States.

Meanwhile, those who lost their jobs or had their hours or wages reduced due to the pandemic still need help from the government.

Trump enacted a second stimulus package in December, which extended several programs to continue helping the unemployed.

But many economists believe that the delay in passing more measures hurt the pace of the recovery.

President Biden's economic agenda includes even more stimulus, but it remains to be seen whether his $ 1.9 trillion plan will be approved in its original form.

Source: cnnespanol

All news articles on 2021-01-28

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