The economic growth of United Sates contracted by 3.6 percent compared to last year due to a wave of coronavirus infections - Photo by the White House

JAKARTA (TheInsiderStories) – The economic growth of United Sates (US) contracted by 3.6 percent compared to last year at 2.2 percent, due to a wave of coronavirus infections, bureau of analysis (BEA) reported on Thursday (01/28). According to the official data, the number its worst contraction since 1946.

The decrease in real GDP in 2020 reflected decreases in personal consumption expenditures (PCE), 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 decrease in PCE was more than accounted for by a decrease in services.

BEA said, current-dollar GDP decreased 2.3 percent or US$500.6 billion in 2020 to a level of $20.93 trillion, compared with an increase of 4.0 percent or $821.3 billion in 2019. In the same year, the price index for gross domestic purchases increased 1.2 percent compared with an increase of 1.6 percent in 2019.

The PCE price index also increased 1.2 percent in 2020, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.4 percent, compared with an increase of 1.7 percent.

In the fourth quarter 2020, the GDP expanded at an annualized rate of 4.0 percent. That contrasts with an annualized growth rate of 33 percent in the previous quarter at 33.4 percent, when the economy broadly reopened after the first wave of infections and lockdowns. The “second” estimate for the fourth quarter will be released on Feb. 25. 

BEA also reported, the increase in real GDP reflected increases in exports, nonresidential fixed investment, personal consumption expenditures, residential fixed investment, and private inventory investment that were partly offset by decreases in state and local government spending and federal government spending.

“The increase in fourth quarter GDP reflected both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States,” said BEA.

While, current‑dollar GDP increased 6.0 percent at an annual rate, or US$309.2 billion, in the fourth quarter to a level of $21.48 trillion. In the third quarter, the GDP increased 38.3 percent, or $1.65 trillion. The price index for GDP purchases increased 1.7 percent in the fourth quarter, compared with an increase of 3.3 percent in the third quarter.

The PCE price index increased 1.5 percent, compared with an increase of 3.7 percent in the third quarter. Excluding food and energy prices, the PCE price index increased 1.4 percent, compared with an increase of 3.4 percent.

While, current-dollar personal income decreased $339.7 billion in the fourth quarter, compared with a decrease of $541.5 billion in the third quarter. The decrease in personal income was more than accounted for by decreases in personal current transfer receipts and proprietors’ income that were partly offset by increases in compensation and personal income receipts on assets.

Disposable personal income decreased $372.5 billion, or 8.1 percent, in the fourth quarter, compared with a decrease of $638.9 billion, or 13.2 percent, in the third quarter. Real disposable personal income decreased 9.5 percent, compared with a decrease of 16.3 percent.

Then, personal saving was $2.33 trillion in the fourth quarter, compared with $2.83 trillion in the third quarter. The personal saving rate was 13.4 percent in the fourth quarter, compared with 16.0 percent in the third quarter. The price index for gross domestic purchases, as measured from the fourth quarter of 2019 to the fourth quarter of 2020, increased 1.3 percent during 2020.

That compared with an increase of 1.4 percent during 2019. The PCE price index increased 1.2 percent, compared with an increase of 1.5 percent. Excluding food and energy, the PCE price index increased 1.4 percent, compared with an increase of 1.6 percent.

Most analysts expect the economy to bounce back strongly this year, with many noting that output and consumption have remained relatively resilient under the latest wave of lockdowns as businesses and consumers have adapted to the new circumstances. The International Monetary Fund on Tuesday raised its estimate for US GDP growth in 2021 to 5.1 percent.

Written by Editorial Staff, Email: theinsiderstories@gmail.com