US govt revises Q4 2020 growth up slightly to 4.3pc

WASHINGTON: The US economy grew at a 4.3 percent annualized rate in the fourth quarter of 2020, slightly better than initially forecast, the Commerce Department said on Thursday in its last estimate of growth for the quarter.

This was above the 4.1 percent growth in the department's second of three forecasts for the fourth quarter, but much less than the 33.4 percent increase seen in the third quarter of the year.

The world's largest economy saw whipsaw growth last year as the Covid-19 pandemic forced businesses to close and lay off employees en masse.

The economy contracted 31.4 percent in the second quarter, when the disruptions were at their worst, then rebounded sharply in the next.

Even with the improved growth reading, the US economy shrank 3.5 percent in 2020, after growing 2.2 percent the year prior.

The world's largest economy is expected to expand rapidly in 2021, thanks to both Covid-19 vaccination drives and massive government stimulus, including a $900 billion measure passed in December, and a $1.9 trillion bill enacted this month.

The Federal Reserve forecast last week that US growth would climb to 6.5 percent in 2021.

"Prospects for growth in 2021 have brightened on vaccine progress that will allow restrictions to be lifted and a more complete reopening of the economy. Adding to the optimism is another round of government aid, which will provide a lift to household spending," Rubeela Farooqi of High Frequency Economics said.