JAKARTA (TheInsiderStories) – United States (US) real gross domestic product (GDP) contracted 3.5 percent throughout 2020, the worst economic freeze since the end of World War II and clouded the outlook for this year, the bureau of economic analysis reported on Thursday (02/25). While, the fourth quarter’ GDP revised up from 4.0 percent to 4.1 percent from the third quarter increased by 33.4 percent.
“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,” wrote the bureau.
The decrease in real GDP reflected in personal consumption expenditure (PCE), export, private inventory investment, nonresidential fixed investment, and state and local government that were partly offset by increases in the government spending and residential fixed investment. The lowering in PCE was more than accounted in services, led by food services and accommodations, health care, and recreation services.
The dropped in exports reflected in services, led by travel and non-automotive capital goods. And, the declining in private inventory investment showed by widespread decreases led by retail trade (mainly motor vehicle dealers) and wholesale trade (mainly durable goods industries).
The lowering in nonresidential fixed investment reflected in structures (led by mining exploration, shafts, and wells) and equipment (led by transportation equipment) that were partly offset by an increase in intellectual property products (more than accounted for by software). Then, the dropped in state and local government spending reflected in consumption expenditures led by compensation.
In addition, the increase in federal government spending reflected in non-defense consumption expenditures (led by an increase in purchases of intermediate services that supported the processing and administration of Paycheck Protection Program loan applications by banks on behalf of the federal government). The rise in residential fixed investment primarily reflected increases in improvements as well as brokers’ commissions and other ownership transfer costs.
The agency also reported, the price index for gross domestic purchases increased 1.2 percent in 2020, 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 total, the GDP decreased 2.3 percent to a level of $20.93 trillion in 2020, compared with an increase of 4.0 percent or $821.3 billion in 2019. Looking the latest data, the economists warn that a sustained recovery unlikely take hold until vaccines are distributed and administered nationwide and government-enacted rescue aid spreads through the economy.
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