The U.S. economy reached great results in the fourth quarter of 2021. It grew at a stronger-than-expected pace, but clouds ranging from the omicron variant to higher interest rates are gathering over the local economy.
According to the U.S. Bureau of Economic Analysis, gross domestic product (GDP) rose at a rate of 6.9% in the fourth quarter compared with the same period of time in 2020.
The economy surpassed expectations. Still, disruptions from the omicron likely weighed on growth during the closing days of December and the opening weeks of this year.
A build-up of inventories by wholesalers as well as retailers led the growth charge in the fourth quarter. Also, consumer spending – which drives some two-thirds of U.S. economic growth – was healthy. But it was not as robust as it was in the first half of last year.
U.S. economy in 2021
The country’s economy rose by 5.7% in 2021, its best result since 1984. Nevertheless, that 80s vibe comes with a downside – namely inflation.
Personal Consumption Expenditures stripped of food, as well as energy, jumped by 4.9% in the fourth compared with a year earlier.
Various factors drove economic growth in 2021. Stimulus checks and vaccines helped to stabilize the situation. And as the U.S. economy reopened, customers unleashed a lot of pent-up demand that few saw coming.
The pandemic had a serious impact on consumers. In the past, consumers spent a lot of money on services. But the pandemic changed the situation. People turned their voracious spending appetites to goods when the economy reopened.
In spite of all challenges, many economists think the U.S. economy will continue to grow this year. Economists just do not see the economy growing as strongly as last year.