9th February 2021
Hugues Chevalier, Economist
In 2020, the United States experienced its first recession since 2008, and the worst since 1946, with a contraction of the GDP of 3.5% according to the first estimate of the United States Department of Commerce. However, this decline is less important than what was expected at the start of the pandemic due mainly to the colossal support fiscal measures. Last year was marked by a production collapse of 31.4% in the second quarter. But the economic growth rebound of 33.4% during Q3 was not enough to reach the pre pandemic activity level. Indeed, at the end of last year, the unemployment rate stood at 6.7% and 9 million jobs have been destroyed since the start of the health crisis. The huge fiscal plan of the Trump administration led to a massive increase of financial transfers of more than USD 1,100 billion to the American households, which allowed their disposable income to increase by 6%, against 2.2% in 2019. But this Increased income was not spent and households saving rate has doubled to 16.4% of the income. The new Biden administration is expected to add a further $ 1.9 trillion support plan this year with the objective to allow a real rebound in activity at the end of the pandemic, no matter the amount “doing more than not enough” according to Ms Yellen. Provided the pandemic is under control in the middle of this year, the US economy is expected to create more than 5 million jobs this year and, according to the IMF, the economy growth should rebound by 5.1% this year.