US economy in 2020 was the worst since 1946

A man walks past a retail store going out of business in Illinois last June. (AP pic)

WASHINGTON: The US economy shrunk by 3.5% 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, non-residential 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% last year while personal consumption expenditures dropped 3.9%.

For the fourth quarter alone, GDP grew by an annual rate of 4%, according to the first estimate for the final three months of the year.

Compared to the July to September period, the measure used in most other countries, fourth quarter growth was just 1%, the report said.

That followed the record 7.5% rebound in the third quarter, and the record 9% drop in the April to June period.

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