US government data showed today, Thursday, that the economy shrank at a record annual rate of 19.2 percent compared to its peak in the fourth quarter of 2019 until the second quarter of 2020, confirming that the recession during the Covid-19 pandemic was the worst ever.
The pace of recovery from the slowdown during the pandemic, which was the worst since 1947, was record.
The Commerce Department’s Bureau of Economic Analysis said gross domestic product recovered at an unprecedented average rate of 18.3 percent between the second and fourth quarters of 2020.
The economy shrank under the weight of mandatory closures of non-essential businesses in March of last year aimed at curbing the first wave of the Corona virus, which led to a record 22.362 million people losing their jobs.
The government provided pandemic relief packages of about $6 trillion while the Federal Reserve cut the benchmark interest rate to nearly zero and pumped money into the economy through monthly bond purchases.
The National Bureau of Economic Research announced last week that the slowdown due to the pandemic, which began in February 2020, ended in April 2020.
The massive fiscal packages, ultra-loose monetary policy pursued by the Federal Reserve, and the COVID-19 vaccination program allowed economic activity to resume, with GDP rising above the pre-pandemic level in the second quarter.
The government said the economy shrank by 3.4 percent in 2020, instead of 3.5 percent as previously estimated.
This was the largest drop in GDP since 1946.