The U.S. economy in 2020 contracted at its sharpest pace since World War Two as the COVID-19 pandemic ravaged services businesses like restaurants and airlines, throwing millions of Americans out of work and into poverty.
A Thursday report from the Commerce Department showed the economy contracted 3.5% in 2020, the worst performance since 1946 and the first annual decline in GDP since the Great Recession.
The department's snapshot of fourth-quarter gross domestic product on Thursday showed the recovery from the pandemic losing steam as the year wound down amid a resurgence in coronavirus infections and exhaustion of nearly $3 trillion in relief money from the government.
On Wednesday, Federal Reserve Chair Jerome Powell made clear the U.S. economy is deep in crisis.
"I would add that we're, as I mentioned, a long way from a full recovery, something like nine million people remain unemployed as a consequence of a pandemic. That's as many people as lost their jobs at the peak of the global financial crisis and the Great Recession. Many small businesses are under pressure, and there are other needs to be addressed in the path ahead is still pretty uncertain."
With the virus not yet under control, economists are expecting growth to slow further in the first quarter of 2021.
but expect it will pick up again later in the year as additional stimulus, planned by President Joe Biden, kicks in and more Americans get vaccinated.
The services sector has borne the brunt of the coronavirus recession, disproportionately impacting lower-wage earners, who tend to be women and minorities.
That has led to a so-called K-shaped recovery, where better-paid workers are doing well while lower-paid workers are losing out.