The double-dip recession so many feared didn't arrive in the fourth quarter of 2020, and it certainly doesn't look like it will happen in early 2021, either.

It's true that renewed shutdowns starting last November finally hit retail sales and employment, especially at restaurants and bars. But much of the economy, like manufacturing output and housing, kept growing in the fourth quarter. As a result, even though the latest "stimulus" bill didn't pass until December, that "stimulus" will now lift the economy in the first quarter when it really needs it.

But don't let that fool you, this growth is "borrowed" from the future. The underlying economy – the part not lifted by deficit spending, is hurting. Nonetheless, and regardless of our view of long-term economic issues because of this massive spending, Congress and President Biden are likely to pass even more spending in the months ahead.

When we combine even more spending with vaccines and warmer weather, the US economy should keep growing. We expect real GDP to grow 4.0% in 2021 (Q4/Q4) while payrolls expand by six million. Whether that much growth in jobs is good or not depends on the eye of the beholder. It would be the largest single calendar-year increase ever in the number of jobs and the fastest percentage gain since the 1970s. But it would also leave us more than two million payrolls short of where we were prior to COVID-19. Progress, yes; a complete recovery, no.

For the actual numbers, we estimate that real GDP grew at a 5.2% annual rate in the fourth quarter, which may change slightly based on reports during the next two weeks, but probably not much. That's a great number, but please remember that it still leaves real GDP 2.2% below where it was a year ago. The damage to small businesses is real and will take years to heal. Here's how we calculate the 5.2% growth in real GDP for Q4:

Consumption: Car and light truck sales rose at a 20.9% annual rate in Q4, while "real" (inflation-adjusted) retail sales outside the auto sector declined at a 2.6% annual rate. We only have reports on spending on services through November, not December, but it looks like real services spending should be up for the quarter. As a result, we estimate that real consumer spending on goods and services, combined, increased at a 3.2% annual rate, adding 2.2 points to the real GDP growth rate (3.2 times the consumption share of GDP, which is 68%, equals 2.2).