Consumer spending was the weakest it has been since 1932 according to a new report from the Commerce Department covering the whole of 2020 and the bulk of the pandemic thus far.
The greater economy also contracted by the most since the end of World War Two and to some degree that was inevitable; a global pandemic was always going to wreck the economy. But it was also the result of choices made by the Republican party.
Republicans refused to pass any additional stimulus measure between last April and December and that contributed to the historically bad consumer spending.
The economy contracted 3.5% in 2020, the worst performance since 1946. That followed 2.2% growth in 2019 and was the first annual decline in GDP since the 2007-09 Great Recession. Nearly every sector, with the exception of government and the housing market, suffered a decline in output last year. The 3.9% drop in consumer spending was the largest since 1932.
The economy plunged into recession last February. In the fourth quarter, GDP increased at a 4.0% annualized rate as the virus and lack of another spending package curtailed consumer spending, and partially overshadowed robust manufacturing and the housing market. GDP growth for the last quarter was in line with forecasts in a Reuters poll of economists.
Our inability to control the pandemic can largely but not entirely be laid at the feet of the former Trump regime which, at one point, was actively promoting uncontrolled spread of the virus to meet one quack's desire to reach herd immunity through death. But the refusal to spend what it takes help average Americans weather the pandemic rests almost entirely on congressional Republicans who are still in Congress today.
Trump is gone, but Senate Republicans who now say Joe Biden's $1.9 trillion proposal is too big also said the same thing when Senate Minority Leader Mitch McConnell released a $500 billion proposal that was eventually trimmed to just $300 billion.
There is no amount of help for average people that Republicans find acceptable. Some of them only begrudgingly vote for spending packages that will still benefit the richest Americans who attend their country clubs.
If Republicans in Congress had their way, the next year or two may not necessarily look all that much better than 2020. We may conquer the pandemic this year, but that doesn't mean consumer spending will immediately return to normal when we do.
Another 847,000 people filed new initial claims for unemployment last week,