Despite volatility during the previous two quarters, US GDP has been adjusted to increase at an annualized rate of 4.0% during the fourth quarter of 2020. This represents a relatively modest rate of growth compared with the third quarter, influenced primarily by general economic uncertainty and a surge in COVID-19 (coronavirus) cases during the late fall and winter months. Additionally, large swaths of the economy are still limited by social distancing regulations and supply chain disruptions. 

As service-based industries continue to struggle, full economic recovery is largely dependent on significant deployment of a vaccine and further economic stimulus. Until an appropriate level of herd immunity is reached, the economy will likely continue to operate at a level that is well below full capacity. Nonetheless, fourth quarter figures do represent a source of optimism following the volatility of the second and third quarter. As the economy continues to tick upward, sentiment toward future uncertainty has shifted from downside risks of the pandemic to upside risks associated with explosive economic growth and inflationary pressures.