Economy shrank 3.5 percent in 2020

Stuck in the grip of a viral pandemic, the U.S. economy grew at a 4 percent annual rate in the final three months of 2020 and shrank last year by the largest amount in 74 years.

For 2020 as a whole, a year when the coronavirus inflicted the worst economic freeze since the end of World War II, the economy contracted 3.5 percent and clouded the outlook for the coming year. The economic damage followed the eruption of the pandemic 10 months ago and the deep recession it triggered, with tens of millions of Americans left jobless.

The economy grew at a four per cent annual rate in the final three months of 2020.

The pandemic’s blow to the economy early last spring ended the longest U.S. economic expansion on record — nearly 11 years. The damage from the coronavirus caused GDP to contract at a five per cent annual rate in last year’s January-March quarter. Since then, thousands of businesses have closed, nearly 10 million people remain out of work and more than 425,000 Americans have died from the virus.

The estimated drop in GDP for 2020 was the first such decline since a 2.5 per cent fall in 2009, during the recession that followed the 2008 financial crisis.