Macroeconomic Conditions in 2020

This section presents an overview of macroeconomic conditions in 2020. The section describes a series of macroeconomic indicators that provide insight into the overall health of the U.S. and global economies, key industry, and international goods trade. The data show that U.S. and global macroeconomic conditions were heavily impacted by the COVID-19 pandemic. U.S. and global gross domestic product (GDP) fell by more than 3 percent; the U.S. dollar experienced significant volatility; and manufacturing output, foreign direct investment (FDI), and global hours worked incurred substantial declines during the year. As the pandemic evolved throughout the year, countries adopted various restrictive measures to help contain the spread of COVID-19.[1] In addition, global demand for certain goods (e.g., petroleum products and transportation equipment) and services (e.g., transport and travel services) fell sharply, while global demand for other goods surged. Together these contributed to major disruptions to economic activities and international trade.

Box MC.1 Timeline of the COVID-19 Pandemic, December 2019–December 2020

December 2019: China reported a cluster of cases of pneumonia in Wuhan, Hubei Province. A novel coronavirus was eventually identified and named COVID-19.

January 2020:

  • 3: China reported an outbreak to the World Health Organization (WHO).
  • 23: China put the city of Wuhan in lockdown and soon implemented similar measures in other Chinese cities.
  • 30: The WHO officially declared a global health emergency on COVID-19.
  • 31: The United States imposed a nationwide prohibition on travelers recently present in China from entering the United States.
  • Global shipping problems began to emerge.

February 2020:

  • China and other countries, including the United States, reported increasing numbers of COVID-19 cases.
  • The United States and other countries began to impose global air travel restrictions.

March 2020:

  • In responding to the pandemic, countries across the world began implementing measures to contain the spread of COVID-19 and imposed temporary restrictions on exports of personal protection equipment (e.g., masks, gloves), pharmaceutical products, hand sanitizer, various food products, and certain other products to mitigate potential shortages of key supplies.
  • 11: The WHO declared COVID-19 a pandemic.
  • 25: USTR announced additional modifications to section 301 tariffs on certain products of China to remove additional duties from medical-care products needed to address COVID–19.
  • 27: The U.S. government adopted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, providing $2 trillion in stimulus measures including direct payments to individuals, enhanced unemployment benefits, small business relief, additional spending for healthcare and COVID-19 testing, and support for state and local governments. The CARES Act included several measures with implications for international trade, including $25 billion in loans and guarantees to U.S. passenger airlines, $4 billion in loans and guarantees for cargo air carriers, and $17 billion for businesses critical to U.S. national security.

April 2020:

  • 14: The International Monetary Fund (IMF) released its April 2020 World Economic Outlook, forecasting a 3 percent contraction of global gross domestic product (GDP) in 2020 while citing “extreme uncertainty” around its global growth forecast.
  • 24: The IMF and World Trade Organization (WTO) called on governments to refrain from imposing export and other trade restrictions of key medical supplies and food in response to the pandemic.

July 2020:

  • 21: The European Union agreed to a nearly $900 billion stimulus package.

December 2020:

  • Three major COVID-19 vaccines were approved under Emergency Use Authorization.
  • Container shipping delays reported as “more frequent and getting longer.”
Sources: 85 FR 16987, March 25, 2020; Taylor, “A Timeline of the Coronavirus Pandemic,” March 17, 2021; WHO, “WHO Timeline–COVID-19,” accessed April 6, 2021; LaBrecque, “The CARES Act Has Passed,” accessed August 6, 2021; IMF, World Economic Outlook Update, April 2020, April 2020; Crane et al., “Business Exit during the COVID-19 Pandemic,” April 14, 2021, 1–59; Goldstein, “U.S. Orders Eviction Moratorium Through Year’s End,” September 1, 2020, sec. Business; WTO, “IMF and WTO Call for Lifting Trade Restrictions,” April 24, 2020; 85 Fed. Reg. 17158 (March 26, 2020); Taylor, “Container Ships Suffer Record Delays as Demand Spikes,” December 17, 2020; USTR, “COVID Exclusions,” accessed August 27, 2021; Bradsher and Chokshi, “Virus Disrupts China’s Shipping,” February 27, 2020; Verma, “‘Very High Risk,’” December 12, 2020.

Global Macroeconomic Trends in 2020

The measures covered in this section are related to international merchandise trade with direct implications for the supply of merchandise exports and global import demand. GDP represents an aggregate measure of total economic activity and the overall health of an economy. Empirical research demonstrates that a positive relationship exists between GDP growth and merchandise trade.[2] Many determinants of GDP growth can directly influence import demand and export supply within an economy.

In addition to GDP, this section describes changes in several indicators related to the global supply of merchandise goods during 2020. For example, manufacturing output described in this section help illustrate shifts in the supply of goods within the United States and global economies. Supply-side shocks such as input cost increases can lead to output reductions or price increases in local and global markets. Furthermore, goods-producing firms can be sensitive to changes in consumer demand and choose to adjust production levels in the face of demand shocks. Additionally, FDI inflows can influence the future production capacity of an economy. Foreign investments in manufacturing and industrial sectors can improve an economy’s ability to produce tradable goods for world markets.

This section also discusses changes in indicators that influence consumer demand for traded goods, beginning with a description of disruptions to labor hours worked during 2020. Wages represent a major source of global household income and can exert significant influence on aggregate demand including demand for imported goods. Additionally, exchange rates can affect trade flows by making traded goods more, or less, expensive. For instance, when the U.S. dollar appreciates, U.S. exports become more expensive to foreign purchasers and U.S. imports become less expensive. Conversely, when the U.S. dollar depreciates, U.S. exports become less expensive while U.S. imports become relatively more expensive.


The real GDP of the United States declined by 3.5 percent in 2020, representing a significant contraction following 2.2 percent growth in 2019. This was the largest percentage contraction during any year since 1946.[3] Among the major components of GDP, personal consumption fell by 3.9 percent, gross private domestic investment fell by 5.2 percent while the U.S. trade deficit increased by 5.6 percent.[4] Government spending increased by 1.1 percent.[5] Much of the decline in these U.S. real GDP components was driven by significant contractions in the consumption and provision of services. Services consumption in 2020 fell by 7.3 percent while exports and imports of services declined by 19.2 and 22.5 percent, respectively.[6]

Global GDP also declined by 3.3 percent in 2020 according to estimates by the IMF.[7] The pandemic-induced economic contraction was felt by most countries at all levels of development. Advanced economies contracted by an estimated 4.7 percent, led by the United Kingdom (UK) and the European Union (EU),[8] with declines of 9.9 and 6.1 percent, respectively. Emerging and developing economies contracted by an estimated 2.2 percent on average in 2020, led by Mexico (8.2 percent) and India (8.0 percent). Following strict containment measures and a rapid economic recovery, China was one of a few economies that saw its GDP expand in 2020, growing 2.3 percent (figure MC.1).[9]

Manufacturing Output

Overall manufacturing output in the United States declined significantly in the first half of 2020 and was followed by a recovery during the second half of the year. According to the United Nations Industrial Development Organization (UNIDO), total U.S. manufacturing output fell by 6.5 percent during 2020.[10] The fall in manufacturing output was driven by steep contractions in wearing apparel, other transport equipment, and motor vehicles, with each experiencing a contraction greater than 15 percent.[11] U.S. manufacturing output of beverages, leather, computer and electronics, and tobacco products expanded in 2020 (figure MC.2).

Global manufacturing output contracted by an estimated 4.1 percent in 2020.[12] The decline was most severe during the second quarter, when output fell 11.2 percent compared to the same quarter of 2019. However, manufacturing output experienced a strong recovery in the third and fourth quarters. By the fourth quarter of 2020, global manufacturing had more than fully recovered, with output expanding by 2.4 percent compared to the fourth quarter of 2019.

Foreign Direct Investment

FDI to the United States fell 40.2 percent, to an estimated $156.3 billion (figure MC.3).[13] Global FDI inflows decreased as well in 2020. Inflows fell by 34.7 percent, from $1.5 trillion in 2019 to $998.9 billion in 2020, nearly 20 percent below the low point following the 2008–09 global financial crisis.[14] FDI declined across all types of investment: the number of new greenfield investment project announcements fell by 33 percent; net cross-border mergers and acquisitions declined by 6 percent; and new international project finance deals dropped by 42 percent in 2020 compared to 2019.[15]

Among major economies, FDI flows to the EU fell by 72.9 percent, from $380.2 billion in 2019 to an estimated $103.2 billion in 2020; FDI flows to the UK dropped by 56.6 percent, from $45.5 billion in 2019 to $19.7 billion in 2020. FDI flows to Japan also fell by approximately 29.5 percent, from $14.6 billion in 2019 to $10.3 billion. China and India are among the few economies that experienced an increase in FDI inflows in 2020: inflows to China increased by 5.7 percent to $149.3 billion, while inflows to India grew by 26.7.[16]

Labor Market

Unemployment in the United States increased significantly, reaching a peak of 13.1 percent in the second quarter before beginning a recovery in the second half of 2020.[17] In addition to the rise in unemployment, a significant proportion of the U.S. working population exited the labor force during the early months of the COVID-19 pandemic. During the second quarter, the labor force participation rate reached a low of 60.2 percent, 3.4 percentage points below pre-pandemic levels. Although some recovery in employment took place, neither unemployment levels nor labor force participation rates recovered to pre-pandemic levels by the end 2020 (table MC.1).[18]

Table MC.1 Quarterly U.S. unemployment and labor force participation rate
In percentages. Q = quarter.







Unemployment rate






Civilian labor force participation rate






Source: U.S. BLS, Unemployment Rate (UNRATE), (retrieved from FRED on June 8, 2021) and U.S. BLS, Labor Force Participation Rate (CIVPART), (retrieved from FRED on June 8, 2021).
Note: quarterly values represent averages across component months.


Figure MC.4 depicts changes in average monthly employment in 2020 compared to 2019.[19] Economy-wide, employment in the United States fell by 6.1 percent in 2020 as most industries experienced declines. Employment fell most significantly in several industries characterized by higher levels of in-person interaction and more limited opportunities to engage in social distancing. The arts, entertainment, and recreation industry as well as the accommodation and food service industry experienced significant employment declines during the year as both industries experienced contractions of more than 20 percent. Employment in finance and insurance as well as public administration increased in 2020, both growing by less than 1 percent.

Annual measures of employment levels likely understate the disruption to work that occurred in 2020. Specifically, employment figures that count workers employed each period do not capture changes in hours worked by employed persons. According to estimates from the International Labour Organization (ILO), the United States lost an estimated 9.2 percent of total working hours due to employment loss and reduced working hours in 2020 compared to annualized fourth quarter 2019 levels.[20] The decline in working hours equates to approximately 13.7 million full-time jobs.[21]

Global working hours are estimated to have fallen by 8.8 percent in 2020 compared to pre-pandemic employment trends.[22] The drop in working hours is equivalent to losing approximately 255 million full-time jobs globally, approximately four times the losses incurred during the 2008–09 global financial crisis.[23] Unemployment and reductions in working hours for workers who remained employed contributed to the global decline in working hours.[24] Among the estimated 114 million workers who lost their jobs in 2020, 81 million (about 71 percent) became inactive, while the rest (33 million or 29 percent) were considered unemployed by ILO standards.[25] Estimated employment losses were higher for women than for men, and for young workers compared to older workers.[26] India, the UK, and Mexico led the declines in working hours among major economies with contractions of 13.7, 12.8, and 12.5 percent, respectively (figure MC.5).[27]

Exchange Rate Trends

The value of the U.S. dollar fluctuated considerably relative to a basket of other major global currencies throughout 2020. The U.S. dollar appreciated significantly vis-à-vis a broad index of global currencies amidst increased uncertainty during the early part of the year, increasing by as much as 10.0 percent during the early months of 2020.[28] In the remainder of 2020, the value of the U.S. dollar trended downward from its peak. By the end of 2020, the U.S. broad dollar index decreased by 3.0 percent relative to the start of 2020.[29] Compared to the beginning of the year, by the end of December 2020 the U.S. dollar had fallen by 8.7 percent vis-à-vis the euro, 6.3 percent relative to the Chinese yuan, and 4.8 percent against the Japanese yen. The U.S. dollar appreciated relative to the Indian rupee and the Mexican peso, increasing in relative value by 2.3 and 5.3 percent, respectively (figure MC.6).



[1] For more information and an additional timeline of COVID-19 related events, see U.S. International Trade Commission, COVID-19 Related Goods, December 2020, 30.

[2] Constantinescu, Mattoo, and Ruta, “The Global Trade Slowdown,” February 1, 2020, 127.

[3] USDOC, BEA, “Domestic Product and Income, Table 1.1.1,” accessed July 2, 2021.

[4] USDOC, BEA, “Gross Domestic Product (Third Estimate), Table 1,” March 25, 2021. In 2020, U.S. exports of goods and services to the world fell by 15.4 percent, while imports contracted 11.3 percent. USDOC, BEA, “National Income and Product Accounts, Table 1.1.5, Gross Domestic Product,” accessed July 26, 2021.

[5] USDOC, BEA, “Gross Domestic Product (Third Estimate), Table 1,” March 25, 2021.

[6] USDOC, BEA, “Gross Domestic Product (Third Estimate), Table 1,” March 25, 2021.

[7] IMF, World Economic Outlook, April 2021, April 6, 2021, 8.

[8] The European Union is a political and economic union of 27 member countries, including Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. The United Kingdom formally withdrew from the EU on January 31, 2020.

[9] IMF, World Economic Outlook, April 2021, April 6, 2021, 8.

[10] UNIDO, “Quarterly Index of Industrial Production (IIP) Database,” accessed June 2021.

[11] The UNIDO database follows the International Standard Industrial Classification (ISIC) 4.0 revision for manufacturing sectors.

[12] UNIDO, World Manufacturing Production Quarter IV 2020, March 2021, 10.

[13] UNCTAD, World Investment Report, 2021, June 21, 2021, 248.

[14] UNCTAD, World Investment Report, 2021, June 21, 2021, iii.

[15] UNCTAD, World Investment Report, 2021, June 21, 2021, 8.

[16] UNCTAD, World Investment Report, 2021, June 21, 2021, 5, 19.

[17] BLS, “Unemployment Rate (UNRATE),” retrieved from FRED on June 8, 2021.

[18] BLS, “Labor Force Participation Rate (CIVPART),” retrieved from FRED on June 8, 2021.

[19] BLS, “Quarterly Census of Employment and Wages,” accessed June 2, 2021.

[20] ILO, “ILOSTAT Working Hours Lost Due to the COVID-19 Crisis,” accessed April 26, 2021.

[21] ILO, “ILOSTAT Working Hours Lost Due to the COVID-19 Crisis,” accessed April 26, 2021. According to the ILO, the full-time job equivalent estimate represents the total estimated weekly hours lost in 2020 divided by 40.

[22] According to the ILO, global working hours fell by 8.8 percent in 2020 compared to annualized estimates of global working hours in the fourth quarter of 2019. ILO, ILO Monitor, January 25, 2021, 1.

[23] ILO, ILO Monitor, January 25, 2021, 5.

[24] ILO, ILO Monitor, January 25, 2021, 8.

[25] The ILO classifies individuals as inactive if they have withdrawn from the labor market because they are not available to work and/or do not search for a job. ILO, ILO Monitor, January 25, 2021.

[26] ILO, ILO Monitor, January 25, 2021, 8.

[27] ILO, “ILOSTAT, Working Hours Lost due to the COVID-19 Crisis,” accessed April 26, 2021.

[28] The broad dollar index is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a large group of major U.S. trading partners. Federal Reserve Board of Governors, “Foreign Exchange Rates,” accessed March 29, 2021.

[29] Federal Reserve Board of Governors, “Foreign Exchange Rates,” accessed March 29, 2021.


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