GDP Trends Show Risks, Opportunities Ahead
January 29, 2021 | Calvin Schnure | Nareit
GDP growth decelerated in the fourth quarter to a 4.0% annualized rate, from the record 33.4% pace in the third quarter. Some slowing was inevitable after the quick gains from reopening stores and businesses that had been shuttered during the initial wave of the pandemic. The recovery still has a long way to go, however, as economic activity remained 2.5% below year-ago levels.
This recession is in several important ways the complete opposite from what happened in past downturns. Most obviously, the downturn resulted from an external shock—a global pandemic that made it unsafe to interact in public, as opposed to the internal weaknesses or financial imbalances that triggered past recessions. Although the current recession has caused severe financial damage to households and businesses, many fundamentals for the U.S. economy remain sound, including low inflation and the financial strength of the banking system, which may bolster the recovery once the pandemic is brought under control.
