UNITED STATES NEWS

US economy grew 5.7% in 2021 in rebound from 2020 recession

Jan 27, 2022, 7:37 AM | Updated: Jan 28, 2022, 2:05 pm
Container ship Ever Far, left, sails down river past the Georgia Ports Authority's Port of Savannah...

Container ship Ever Far, left, sails down river past the Georgia Ports Authority's Port of Savannah, Wednesday, Sept. 29, 2021, in Savannah, Ga. Inflation has spiked during the recovery from the pandemic recession as Americans have ramped up spending on such items as cars, furniture and appliances. Those increased purchases have clogged ports and warehouses and exacerbated supply shortages of semiconductors and other parts. (AP Photo/Stephen B. Morton)

(AP Photo/Stephen B. Morton)

WASHINGTON (AP) — The U.S. economy grew last year at the fastest pace since Ronald Reagan’s presidency, bouncing back with resilience from 2020’s brief but devastating coronavirus recession.

The nation’s gross domestic product — its total output of goods and services — expanded 5.7% in 2021. It was the strongest calendar-year growth since a 7.2% surge in 1984 after a previous recession. The economy ended the year by growing at an unexpectedly brisk 6.9% annual pace from October through December as businesses replenished their inventories, the Commerce Department reported Thursday.

“It just goes to show that the U.S. economy has learned to adapt to the new variants and continues to produce,” said Beth Ann Bovino, chief economist at Standard & Poor’s Global Ratings.

Squeezed by inflation and still gripped by COVID-19 caseloads, the economy is expected to slow this year. Many economists have been downgrading their forecasts for the current January-March quarter, reflecting the impact of the omicron variant. And for all of 2022, the International Monetary Fund has forecast that the the nation’s GDP growth will slow to 4%.

Many U.S. businesses, especially restaurants, bars, hotels and entertainment venues, remain under pressure from the omicron variant, which has kept millions of people hunkered down at home to avoid crowds. Consumer spending, the primary driver of the economy, may be further held back this year by the loss of government aid to households, which nurtured activity in 2020 and 2021 but has mainly expired.

What’s more, the Federal Reserve made clear Wednesday that it plans to raise interest rates multiple times this year to battle the hottest inflation in nearly four decades. Those rate increases will make borrowing more expensive and perhaps slow the economy this year.

Growth last year was driven up by a 7.9% surge in consumer spending and a 9.5% increase in private investment.

For the final three months of 2021, consumer spending rose at a more muted 3.3% annual pace. But private investment rocketed 32% higher, boosted by a surge in business inventories as companies stocked up to meet higher customer demand. Rising inventories, in fact, accounted for 71% of the fourth-quarter growth.

“The upside surprise came largely from a surge in inventories, and the details aren’t as strong as the headline would suggest,” Kathy Bostjancic, Oxford Economics’ chief U.S. financial economist, said in a research note.

In a statement, President Joe Biden said, “We are finally building an American economy for the 21st century, with the fastest economic growth in nearly four decades, along with the greatest year of job growth in American history.”

Arising from the 2020 pandemic recession, a healthy rebound had been expected for 2021. GDP had shrunk 3.4% in 2020, the steepest full-year drop since an 11.6% plunge in 1946, when the nation was demobilizing after World War II. The eruption of COVID in March 2020 had led authorities to order lockdowns and businesses to abruptly shut down or reduce hours. Employers slashed a staggering 22 million jobs. The economy sank into a deep recession.

But super-low interest rates, huge infusions of government aid — including $1,400 checks to most households — and, eventually, the widespread rollout of vaccines revived the economy. Many consumers regained the confidence and financial wherewithal to go out and spend again.

The resurgence in demand was so robust, in fact, that it caught businesses off guard. Many struggled to acquire enough supplies and workers to meet a swift increase in customer orders. With many people now working remotely, shortages became especially acute for goods ordered for homes, from appliances to sporting goods to electronic equipment. And with computer chips in especially short supply, auto dealers were left desperately short of vehicles.

Factories, ports and freight yards were overwhelmed, and supply chains became ensnarled. Inflation began to accelerate. Over the past 12 months, consumer prices soared 7% — the fastest year-over-year inflation since 1982. Food, energy and autos were among the items whose prices soared the most.

Late last year, the economy began to show signs of fatigue. Retail sales, for instance, fell 1.9% in December. And manufacturing slowed in December to its lowest level in 11 months, according to the Institute for Supply Management’s manufacturing index.

___

AP Writer Zeke Miller contributed to this report.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Lifetime Windows & Doors

United States News

Associated Press

Officers: Wellness check leads to fatal shooting in Florida

ST. PETERSBURG, Fla. (AP) — A police officer fatally shot a man early Sunday while conducting a wellness check at a home in St. Petersburg, officials said. Just before 4 a.m. Sunday, St. Petersburg police officers responded to a report of a hit and run. Officers found the bumper of the suspect’s car at the […]
12 hours ago
FILE - Jon Batiste attends the TIME100 Gala celebrating the 100 most influential people in the worl...
Associated Press

Jon Batiste to sing for Macron at Biden’s 1st state dinner

NANTUCKET, Mass. (AP) — Musician Jon Batiste is on tap to perform at President Joe Biden’s first White House state dinner on Thursday, highlighting long-standing ties between the United States and France and honoring President Emmanuel Macron. “An artist who transcends generations, Jon Batiste’s music inspires and brings people together,” said Vanessa Valdivia, a spokesperson […]
12 hours ago
Fans from the United States cheer for their team during the World Cup group B soccer match between ...
Associated Press

US-England World Cup game seen by 19.98M on US television

NEW YORK (AP) — The United States’ 0-0 draw against England in the World Cup drew 19.98 million viewers for English- and Spanish-language broadcasts, the third-most watched men’s soccer game on U.S. television. The match, which kicked off at 2 p.m. EST on Friday, was seen by 15,377,000 viewers on Fox, the most for a […]
12 hours ago
FILE - Chickens walk in a fenced pasture at an organic farm in Iowa on Oct. 21, 2015. Nebraska agri...
Associated Press

Bird flu prompts slaughter of 1.8M chickens in Nebraska

OMAHA, Neb. (AP) — Nebraska agriculture officials say another 1.8 million chickens must be killed after bird flu was found on a farm in the latest sign that the outbreak that has already prompted the slaughter of more than 50 million birds nationwide continues to spread. The Nebraska Department of Agriculture said Saturday that the […]
12 hours ago
FILE - Vern Miyagi, Administrator, HEMA, left, and Hawaii Gov. David Ige addressed the media during...
Associated Press

Hawaii Gov. Ige looks back on coronavirus, tourism shutdown

HONOLULU (AP) — As Hawaii’s governor, David Ige faced a volcanic eruption that destroyed 700 homes, protests blocking construction of a cutting-edge multibillion-dollar telescope and a false alert about an incoming ballistic missile. During the COVID-19 pandemic, tourism shut down and Hawaii’s unemployment rate soared to 22.4%. Crisis response is one way to sum up […]
12 hours ago
Sheetal Deo and her husband, Sanmeet Deo, hold a Hindu swastika symbol in their home in Syosset, N....
Associated Press

Asian faiths try to save sacred swastika corrupted by Hitler

Sheetal Deo was shocked when she got a letter from her Queens apartment building’s co-op board calling her Diwali decoration “offensive” and demanding she take it down. “My decoration said ‘Happy Diwali’ and had a swastika on it,” said Deo, a physician, who was celebrating the Hindu festival of lights. The equilateral cross with its […]
12 hours ago

Sponsored Articles

(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
SCHWARTZ LASER EYE CENTER

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
US economy grew 5.7% in 2021 in rebound from 2020 recession