THREAD: The 2020 US economy in 8 charts—
The contraction was smaller than earlier projected & is likely smaller than that of other big, advanced countries. This partially reflects substantial US policy response, but also that the US has taken fewer steps to curb COVID-19.
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The contraction was smaller than earlier projected & is likely smaller than that of other big, advanced countries. This partially reflects substantial US policy response, but also that the US has taken fewer steps to curb COVID-19.
👇👇👇
1—The US economy contracted 3.5% on an annual basis in 2020, the largest contraction for any full year since the demobilization from World War II in 1946. 
2—Among the largest 4-quarter contractions in GDP since demobilization. Measuring economic growth from Q4 to Q4 is the best way to see what happened in the economy in a year. In 2020, this was a big GDP contraction in Q2, then a substantial, but incomplete rebound in Q3 & Q4.
3—The contraction in GDP was not nearly as bad as most predictions earlier this year.
As the year progressed and the speed of the initial recovery and the effects of the policy response became apparent, forecasters became less pessimistic.
As the year progressed and the speed of the initial recovery and the effects of the policy response became apparent, forecasters became less pessimistic.
4—The contraction in GDP was likely less bad than for other advanced economies. Among the other major advanced economies, only Japan is expected to have a smaller contraction than the United States.
5—The largest increase in annual disposable personal income since 1984, fueled by supplements to unemployment insurance, stimulus checks, & support for small businesses. However, aggregate gains hide the very real pain & hardship millions of households faced in 2020.
6—Consumption grew for durable & nondurable goods while falling sharply for services.
The large increase in disposable income meant that many households could largely maintain their purchasing power, but pandemic-related closures affected what they were able to buy.
The large increase in disposable income meant that many households could largely maintain their purchasing power, but pandemic-related closures affected what they were able to buy.
7—The 13.7% growth in residential housing in 2020 was a particularly strong part of the economy. The Fed’s combination of near-zero federal funds rate & substantial purchases of mortgage bonds drove mortgage rates to lowest on record, driving growth in residential construction.
8—The US economy enters 2021 with $1.6 trillion of excess savings. For all of 2020, disposable personal income was $0.6 trillion above trend & consumption was $1 trillion below trend. The saving rate was 16%, above the 7% average in recent years.
Read more and find details and data by @jasonfurman & Wilson Powell III here: piie.com/blogs/realtime…
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