People wearing protective masks shop at Macy's Herald Square following the outbreak of the coronavirus disease (COVID-19) in…
FILE - People wearing protective masks shop at Macy's Herald Square following the outbreak of the coronavirus disease (COVID-19) in the Manhattan borough of New York City, New York, Dec. 26, 2020.

WASHINGTON - The U.S. economy slowed markedly but didn’t collapse in the last three months of 2020, the Commerce Department reported Thursday, even as thousands of businesses have been forced to curtail their operations because of the still surging coronavirus pandemic. 

The U.S. national economy, the world’s largest, grew by 1% in the October-to-December period, down from a robust 7.5% advance in the previous three months.  

With the sharp economic decline recorded at the height of the pandemic earlier in the year, the U.S. economy slumped 3.5% in 2020 from the prior year, the Commerce agency reported. By comparison, the economy gained 2.2% in 2019. 

FILE - Sale signs are displayed in the window of a business in Brooklyn in New York City, Dec. 1, 2020.

Still, the 2020 decline was not as severe as some financial experts had predicted when the coronavirus first swept into the U.S. a year ago. Now, economists are predicting an eventual rebound in 2021, particularly in the second half of the year, as millions of Americans are inoculated against the virus. 

Some experts believe the economic improvement already may have started in January as the $900-billion coronavirus relief package signed by former President Donald Trump last month courses through the U.S. economy. 

Now, new U.S. President Joe Biden is pushing for more aid, a $1.9 trillion deal that would boost unemployment compensation for jobless workers through September and send $1,400 to all but the biggest wage earners. Congress has yet to agree to the deal, however, and the eventual scope of any assistance is uncertain. 

Unemployment compensation claims remained elevated last week, the U.S. Labor Department reported Thursday, but improved over the week before.  

The government said 847,000 workers filed for benefits last week, down 67,000 from the revised figure of the previous week.   
   
But as Biden starts his second week in office, the U.S. economy is still facing headwinds, with tens of thousands of people being infected daily and employers confronted with new orders from state and municipal officials to restrict business hours or to shut down to try to prevent the spread of the virus.  
   
The government reported earlier this month that U.S. employers cut 140,000 jobs in December, the first drop in job growth since the pandemic swept into the country last March and April and sent the national economy reeling.  
   
For weeks, the number of jobless benefit claims had stayed steady in the 700,000 to 800,000 range but rose even further in recent weeks. All the weekly totals in the last several months have been well below the 6.9 million record number of claims filed late last March as the pandemic took hold in the U.S. Still, all the weekly jobless benefit claim figures in the last 10 months have been above the highest pre-pandemic level in records going back to the 1960s.  

The national government has been making $300-a-week extra payments to the jobless on top of less generous state benefits, a stipend that will last into March. Biden, as part of his proposed $1.9-trillion coronavirus relief package, is trying to boost that stipend to $400 a week through September.  
   
Biden has narrow majorities in both the Senate and House of Representatives, possibly easing approval of his relief plan, but only if Democrats vote as a bloc or the president can convince some Republican lawmakers to support it.  
   
It took months, though, for Trump and fractious lawmakers in Congress to reach a deal on the $900 billion coronavirus relief measure that included the $300-a-week jobless aid, suggesting that any new spending also might be tough to negotiate.  
   
Nearly 10 million of the 22 million workers who lost jobs remain unemployed in the U.S. The jobless rate held steady at 6.7% in December, with many economists saying the figure could remain elevated for months.  
   

FILE - A 'Now Hiring' sign hangs on the front wall of a Harbor Freight Tools store in Manchester, N.H., Dec. 10, 2020.

U.S. employers have called back millions of workers who were laid off during business shutdowns earlier this year. But some hard-hit businesses have been slow to ramp up their operations again or have closed permanently, leaving workers idled or searching for new employment.  
   
Some state and municipal officials now, however, have imposed new restrictions on businesses, forcing owners to once again lay off workers.   
   
The aid pact Trump signed includes $600 payments to more than 80% of adult Americans, excluding the biggest wage earners. Biden is asking for additional $1,400 payments, although some lawmakers have said the payments should be more targeted, going only to lower-income people who most need the money.  
   
In the December negotiations, Republican lawmakers said the additional aid was too costly. With Democrats controlling the levers of power in Congress and the White House after Biden’s inauguration a week ago, more aid could be approved as the death toll mounts from the coronavirus.  
   
While the U.S. economy has regained strength since the earliest days of the coronavirus pandemic, the Commerce report shows how much the growth slowed in the last three months of 2020. The U.S. has now recorded 429,000 coronavirus deaths and 25.6 million infections, both figures higher than that being reported in any other country, according to Johns Hopkins University.  

Economists expect the U.S. economy’s recovery to gain momentum in the second half of 2021, after passage of the December stimulus package and as millions of people eventually are inoculated against the disease.  

More than 24 million Americans have been vaccinated against the coronavirus so far, 6.2% of the U.S. population.