A few weeks ago, we saw the first reading of economic growth for the 4th quarter of last year. Though this number is subject to two revisions, the increase of 4.0% is not expected to change all that much. Taken by itself, a rise of 4.0% would be seen as fairly substantial. However, when you look at all of 2020, you see a different picture.
We entered the year with a slowing economy, as the economy grew only 2.4% at the end of 2019. That slow economy shut down at the end of the first quarter (-5.0%) and stayed shut down through most of the second quarter (-31.4%). We then had a steep rebound in the third quarter (+33.4%) and then the +4.0% finish. If you add up the numbers, this was 36.4% on the downside and 37.4% on the upside. Regardless of the math, the economy actually fell 3.5% for the year because the growth was from a smaller number.
These somewhat even numbers at the end mask the roller coaster ride we saw in 2020. This was the first negative year for economic growth since the great recession and the largest annual drop since just after World War II. Here is the good news — most economists are looking for positive economic growth this year, but we will still have some time to dig out, as growth is not supposed to accelerate until the second half of the year. It takes a while for most to recover from a dazzling roller coaster ride. That must just be how riders will feel after they get off the tallest roller coaster in the world, due to open in Saudi Arabia in 2023 – peaking at 155 miles per hour!
Dave Hershman is the top author in the mortgage industry. Dave has published seven books, as well as hundreds of articles and is the founder of the OriginationPro Marketing System and Mortgage School. Want to send this commentary and other news in a personalized format to your sphere database or on social media? Sign up for a free trial at www.OriginationPro.com.