In 2020, the U.S. economy shrank by 3.5% and had its worst year for growth since World War II, according to The Washington Post.
It is the first time the economy has contracted for the year since 2009, when gross domestic product shrank by 2.5% during the Great Recession. In 1946, the economy shrank by 11.6% as the U.S.’ wartime spending ended.
Overall, the economy was surprisingly resilient during the second half of 2020, considering the falloff at the beginning of the COVID-19 crisis. However, the 1% growth in the fourth quarter signaled challenges ahead, with 9.8 million jobs still missing. Consumer spending in the final three months of the year slowed in all 15 categories.
“2020 has no precedent in modern economic history,” said David Wilcox, senior fellow at the Peterson Institute for International Economics and a former director of the domestic economics division at the Federal Reserve. “The influenza of 1918 and 1919 predates our modern system of economic statistics, and since World War II, there’s never been a contraction that even remotely approached the severity and the breadth of the initial collapse in 2020.”
