Pace of US economic rebound slowed at the end of 2020

The rate of the US economy’s rebound from the coronavirus-fuelled downturn slowed in the fourth quarter, weighed down by a deadly surge of cases over the holiday season.

Gross domestic product advanced 4 per cent on an annualised basis, according to figures published on Thursday by the US commerce department. Economic output advanced 1 per cent compared with the previous quarter, based on the measure used by other major economies.

Economists had expected the US economy to advance by an annualised 4 per cent, following a 33.4 per cent rise in the third quarter, the strongest annual rate of growth in postwar history.

The US has proven to be one of the more resilient economies in the face of unprecedented shutdowns during the pandemic. Annual GDP will eclipse its level from the end of 2019 around the middle of this year, the IMF estimated this week. The group also raised its US growth forecast for 2021 by two percentage points to 5.1 per cent.

But a resurgence of coronavirus, which prompted a new round of tighter restrictions in some parts of the country, weighed on business activity during the final stretch of 2020 and has kept the labour market on unsteady footing while the rollout of coronavirus vaccines ramps up.

New US jobless claims fell last week but remained historically elevated at 847,000, compared with 914,000 in the previous week.

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