Government revises fourth quarter GDP up slightly to 4.1%

A woman carries a shopping bag while walking past a cosmetics store, right, near Faneuil Hall, behind left, Monday, Sept. 28, 2020, in Boston. The U.S. economy expanded at a 33.4% annual pace from July through September, the Commerce Department said Tuesday, Dec. 22, 2020 delivering the last of three estimates on the economy’s third-quarter performance. (AP Photo/Steven Senne, file)

WASHINGTON (AP) — The economy grew at a slightly faster pace in the final three months of 2020 than first thought, ending a year in which the overall economy shrank more than it had in the past seven decades.

Gross domestic product — the broadest measure of economic health — grew at an annual rate of 4.1% in the fourth quarter, up from an initial estimate of 4% growth, the Commerce Department reported Thursday.

The revision does alter the nation's annual GDP which shrank 3.5%, the largest decline since 1946 when the U.S. demobilized after World War II.

However, economists believe 2021 will see a significant rebound, helped by further government stimulus, more widespread distribution of vaccines and continued low-interest rate policies from the Federal Reserve.

Some expect GDP growth in the current quarter could top 9% and for the year, economists are forecasting GDP growth perhaps as high as 6%. That would be the fastest annual GDP growth since the economy expanded 7.2% in 1984 when Ronald Reagan was president.

The new forecasts represent a significant rebound in optimism in the past month as coronavirus cases have started to come down, sparking a big jump in retail sales.

“You have massive government stimulus, low interest rates from the Fed and the vaccine supply is growing,” said Sung Won Sohn, finance and economics professor at Loyola Marymount University in Los Angeles. “The economy is beginning to fire on all cylinders.”