2021 economy boomed at fastest rate in 37 years
The U.S. economy surged ahead with a 6.9% annual growth rate in the final months of 2021 and achieved the strongest growth over an entire calendar year since 1984.
Driving the news: New GDP numbers from the Commerce Department show a remarkable acceleration in economic activity, much faster than the 5.3% growth rate analysts expected.
Businesses built up depleted inventories, accounting for 4.9 percentage points of the gain. That is good news for customers tired of empty store shelves, but bad news for the coming quarters, as inventory swings tend to be one-off rather than indicative of future growth.
By the numbers: The new data still showed a solid trend growth rate that points to continued expansion in the quarters ahead.
- Personal consumption expenditures rose at a 3.3% annual rate, and spending started to rebalance, with services spending (+4.7%) rising much faster than durable goods spending (+0.5%).
- Residential investment actually subtracted from overall G.D.P. for the third straight quarter, despite a booming housing market, reflecting supply strains holding back home construction.
Yes, but: While GDP is rising rapidly, it remains about 1% below where the forecasters thought it would be at this point before the pandemic struck. There is still more ground to make up.
The bottom line: The numbers show just how far the economy came toward recovery in 2021, even with all the challenges that stood in the way of a full reopening.