Gross Domestic Product Increases in Q4 2020 but Year-Over-Year Declines -3.5%

According to the “advanced” estimate released today (1-28-21) by the U.S. Bureau of Economic Analysis real gross domestic product (GDP) increased at an annual rate of 4% in Q4 of 2020. In Q3 the real GDP increased 33.4%. The Q4 increase marks the second consecutive quarter of growth following the largest contraction on record in Q2 of 2020. For all of 2020, the real GDP contracted -3.5%, compared to a 2.2% increase in 2019. This is the first GDP contraction since 2009 and the worst recession since 1946. The Q4 2020 increase in real GDP revealed increases in personal consumption expenditures (PCE) which accounts for approximately 70% of the economy. Consumer spending is the mainstay of the U.S. economy and it increased at annual rate of 2.5%, following a 41% increase in Q3.