In 2020, the US economy contracted an estimated 3.5 percent, the worst decrease since World War 2. This is the worst economic freeze since the Second World War ended. In the last three months of 2020, the economy grew at a rate of 4% per year.
The pandemic’s blow to the economy ended the longest economic expansion on record early last spring. Thousands of companies have since closed down, nearly 10 million people are still out of work, and more than 425,000 Americans have died of the virus.
Economists warn that, until vaccines are distributed and administered nationwide, a sustained recovery will not likely take hold. On Wednesday, the Federal Reserve kept its benchmark interest rate at a record low near zero. It stressed that until a recovery is well underway, it would keep pursuing its low-rate policies. For six straight months, hiring in the U.S. has slowed. For the first time since April, employers shed jobs in December. Americans have been discouraged from travelling, shopping, dining out or visiting entertainment venues by pandemics and colder weather. Many economists warn that the economy risks succumbing to another recession without further support. Last week, the number of Americans applying for unemployment benefits dropped but stayed at a historically high 847,000. Before last March, the virus hit the United States, weekly jobless aid applications had never surpassed 700,000. Mark Zandi estimates that about five million jobs will never return, forcing the unemployed in industries such as restaurants and bars to find work in other sectors.