The U.S. economy grew at a 2.9% annual rate in the fourth quarter of 2020, according to the latest report from the Commerce Department. The news was welcomed by economists, as it marked a slight improvement from the third quarter’s 2.5% growth rate.
However, the report also revealed an ominous sign not seen since the Great Depression: a drop in the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures price index. The index fell 0.1% in the fourth quarter, the first decline since 1932.
Experts are divided on the implications of the report. While some see the 2.9% growth as a sign of economic recovery, others point to the underlying weakness in the economy. The Wall Street Journal reported that the economy slowed down in the fourth quarter, with a drop in investment spending and weak jobless claims data.
Meanwhile, Reuters reported that the U.S. economy posted strong growth in the fourth quarter, but with underlying weakness. CNBC Television spoke to experts who expressed concerns about the potential impact of the pandemic on the economy.
Overall, the fourth quarter GDP report is a mixed bag, with signs of economic recovery tempered by underlying weaknesses.