US economy shrank 3.5% in 2020 after growing 4% last quarter; jobless claims drop but still high

(AP) — Stuck in the grip of a viral pandemic, the U.S. economy grew at a 4% annual rate in the final three months of 2020 and shrank last year by the largest amount in 74 years. For 2020 as a whole, a year when the coronavirus inflicted the worst economic freeze since the end of World War II, the economy contracted 3.5% and clouded the outlook for the coming year. The economic damage followed the eruption of the pandemic 10 months ago and the deep recession it triggered, with tens of millions of Americans left jobless.

The number of Americans applying for unemployment benefits fell to a historically high 847,000 last week, a sign that layoffs remain high as the coronavirus pandemic continues to rage. The Labor Department said Thursday that last week’s claims were down by 67,000 from 914,000 the week before. Before the virus hit the United States hard last March, weekly applications for jobless aid had never topped 700,000.Overall, nearly 4.8 million Americans are continuing to receive traditional state unemployment benefits. That is down from a staggering peak of nearly 25 million in May when the virus — and lockdowns and other measures to contain it — brought economic activity to a near halt.