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U.S. Economy Grew 5.7% In 2021, Fastest Rate Since Reagan Days

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The U.S. Economy had a strong recovery from the Covid mayhem by the end of 2021 as the gross domestic product grew 5.7%. This is the fastest growth rate since 1984, when Ronald Reagan was president, according to the Bureau of Economic Analysis on Thursday.

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Q4 2021 hedge fund letters, conferences and more

U.S. Economy Bounces Back

As reported by CNN Business, the economy of the U.S. had a solid year as growth capped 5.7%, with the last three months of 2021 beating analysts’ predictions by hitting 6.9% in terms of GDP annualized rate.

This last passage represents a great improvement from the third quarter, when the Delta variant dented estimates and forced GDP to climb 2.3%. Q4 hence becomes the best quarter since Q3 2020 when the economy reopened and consumers rushed to spend.

The positive news arrives amid growing inflation, supply chain issues, and staff shortages —which have come to be known as the Great Resignation.

The numbers relating to these issues have also grown, especially “the personal consumption expenditure price index —a key measure of inflation— rose 3.9%, the largest increase since 1990.”

Omicron

Despite the success of 2021, this year seems a slightly different story as Omicron infections exploded in November, placing thousands of employees on sick leave and affecting business operations, mainly in December and January.

Joe Brusuelas, chief economist at RSM US, says: “The Omicron variant almost surely took the edge off growth during the final month of the year, and it is clearly extracting a powerful toll on overall economic activity in the first quarter of 2022.”

Growth expectations are also seen through the Federal Reserve’s intention to roll back the stimulus implemented during the pandemic, and increase interest rates in March to tackle inflation.

There is a possibility that the U.S. economy will grow slower once these measures are implemented, since “While we have reached the end of pandemic era fiscal and monetary policy the pandemic is not yet over,” Brusuelas says.

According to CNBC, “Jobless claims remained elevated at 260,000 while orders for long-lasting goods hit their lowest point since April 2020, signaling an end-of-year slowdown.”