• Bernhardt Wealth Management

GDP Growth: US vs. Eurozone

As everyone knows, the pandemic lockdown in spring 2020 shuttered economies around the world, sending markets into a tailspin and creating widespread anxiety as people began to fall ill from the disease and health agencies scrambled to find answers. Since then, with the advent of vaccines and other public health measures, the world has slowly returned to something approaching “pre-pandemic normal,” though concerns remain, especially with the current rise of the delta variant and other mutations of the coronavirus that causes the disease.

How has the US economy performed during the recovery period, as compared with that of the Eurozone? In the first quarter of 2021, at roughly the same time as the vaccine rollout, US gross domestic product (GDP) grew at an annual rate of 6.4%, which followed a 4.3% growth rate in the last quarter of 2020. By contrast, the GDP in the Eurozone shrank by 0.6% during the first quarter of the year.


Since then, as we moved into the summer and widespread easing of lockdown measures in the US, domestic GDP appears to have responded with a robust growth rate of 6.5%, though this is an advance measurement, as final figures for July are still being tabulated by the US Bureau of Economic Analysis (bea.gov). At the same time, the Eurozone presented evidence of a return to growth mode, moving out of contraction and expanding at a rate of about 2%. From the lows of the 2020 lockdown, this represents an improvement in the European economy of almost 14%.


How about employment? By the end of the first quarter of 2021, unemployment in the US stood at 6%, compared with the pre-pandemic low of 3.5% unemployment in February 2020, just before the lockdowns. By the end of Q2 2021, the rate stood at about 5.4%, greatly improved from the double-digit highs during the lockdown, but still above pre-pandemic levels. In the Eurozone, meanwhile, unemployment stood at 8.1% at the end of the first quarter of 2021, and since then has improved slightly, to 7.7%.


The US economy seems to be leading the world back toward recovery. Of course, as always, uncertainties remain. The current surge of the delta variant is still worrisome, because if infection, hospitalization, and death rates increase to alarming levels, businesses, consumers, and states will likely begin to consider more drastic measures in order to curb the spread and conserve space in hospitals so that the most critically ill can receive adequate care. One encouraging trend, however, is that more individuals are making the personal decision to receive the vaccine. As the percentage of COVID-resistant individuals in the population increases, the less we will need to be concerned about rising infection rates or a return to the stringent measures of early 2020. That will be a good thing for everybody.


As professional, fiduciary wealth managers and financial advisors, we stay abreast of current developments and the latest financial research in order to provide our clients with the facts and recommendations they need to create robust financial plans for the future. To read our recent article about investments for long-term returns, click here.


Buen Camino!


30 views0 comments