US economy in 2020 has worst year since 1946

US economy in 2020 has worst year since 1946

Net exports fell 13 per cent last year while personal consumption expenditures dropped 3.9%

 Representative Image. Credit: AFP Photo

The US economy shrunk by 3.5 per cent last year as the Covid-19 pandemic shut down large sectors of business and daily life, according to government data released Thursday.

It was the biggest contraction of the world's largest economy since 1946, the Commerce Department said.

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.

Net exports fell 13 per cent last year while personal consumption expenditures dropped 3.9 per cent.

For the fourth quarter alone, GDP grew by an annual rate of 4.0 per cent, 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 per cent, the report said.

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