2021: A Good Year, For The Economy
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By: Michael Argenta
January 30, 2022
Believe it or not, the U.S. economy grew at its fastest pace since 1984, last year. While the Delta and Omicron COVID-19 variants swept the nation, people continued to buy and produce. Between October and December, the economy grew at a 6.9% annual rate and 5.7% throughout the year. This unlikely occurrence helped make up for the 2020 economic downturn when it contracted by 3.4% - the worst result since 1946. Although 2021 was not a typical year, it was an excellent year for the economy.
2021’s strong growth was propelled by government spending and fiscal stimulus checks. While businesses received bailouts and consumers got unexpected money, they decided to spend it. From home offices and improvements to unexpected purchases, gross domestic product (GDP) went up as a result of transactions. With production ramping back up as workers dealt with the pandemic, most businesses were nearly back to normal.
However, while this rapid growth did good, creating a record 6.4 million jobs; it also brought a myriad of supply chain issues and the highest interest rates in 40 years. Although people continued to spend money, not all products were available due to continuing trade constraints. In addition, inflation is rising because of the continued spending spree of consumers affecting supply and demand. 2021 may look good on the record books, but this does not mean people should not be concerned.
Economists expect more growth of 3.9% in 2022, with far less support behind it. As the Fed raises interest rates and stimulus checks are unlikely, economic growth will once again rely on consumers' wants and needs. Rising inflation is a serious concern that will impact the economy, so this will be interesting to follow. Overall, after two odd years of the pandemic: it is good to see it has not hindered the economy for long.