The gross domestic product (GDP) of the United States recorded a growth of 5.7% in 2021, its largest increase since 1984.
The United States recorded in 2021 its strongest growth since 1984, driven by massive stimulus plans and vaccination, but 2022 is already threatened by Omicron, inflation, and the paralysis of Joe Biden’s investment plan. The gross domestic product (GDP) of the world’s largest economy grew 5.7% in 2021, according to a preliminary Commerce Department estimate released Thursday. It was driven by household consumption expenditure (+7.9%) and business investment in the country (+9.5%).
US President Joe Biden hailed the growth: “GDP numbers for my first year show we’re finally building an American economy for the 21st century,” he said.
This strong economic rebound, however, comes after the historic contraction of growth in the United States in 2020, under the effect of the health crisis linked to Covid-19: GDP had fallen by 3.5%, recording its largest drop since 1946. The growth recorded in 2021 is better than expected by the American central bank (Fed) which anticipated a rebound of 5.5% in 2021 and by the International Monetary Fund (IMF) which forecast 5.6%.
8.1% for China
China, the great rival of the United States, recorded an 8.1% increase in its GDP in 2021, despite a decline in its real estate sector, the engine of its growth, and weaker domestic consumption linked to the draconian measures aimed at contain the Omicron variant. French growth will be known on Friday, and is expected at 6.7%. Eurozone GDP will be released on Monday.
The year 2021 had started with a bang. The bank accounts of American households had been inflated by massive stimulus plans and aid, particularly unemployment. And in the spring, it was hoped that the pandemic would soon seem like a distant memory thanks to an active vaccination campaign. Growth was 6.4% in the first quarter, and 6.7% in the second. The world’s largest economy had even returned to its pre-epidemic level. But the appearance of the Delta variant sounded the reality check and growth had slowed to 2.3% in the third quarter.
In the fourth quarter, growth accelerated to 6.9% at an annualized rate, much more than expected by analysts, who saw it jump to 5.6%. And GDP is 3.1% higher than in the fourth quarter of 2019, the last before the Covid-19 pandemic. Appeared in November, Omicron only began at the very end of the year to weigh on the American economy.
The United States favors annualized GDP growth, which projects single-quarter growth over the full year at that rate. Other advanced economies, such as France, use a simple comparison to the previous quarter. Taking this method of calculation, the growth of the United States was 1.7%.
The trillions of dollars injected into the economy by the federal government have certainly allowed the economy to rebound quickly and strongly, but it has also caused prices to rise. Because opposite, the offer fails to follow, because of the global disruptions of supply which cause shortages and delays.
Consumer prices rose 3.9% in 2021, the biggest rise since 1990, with an acceleration in the last quarter (+6.5%), according to the Commerce Department’s PCE index, favored by the bank. central american (Fed), and also published on Thursday. The other inflation index, that of the Department of Labor (PCI), published on January 12, had reported inflation of 7% in 2021, the largest increase since June 1982. This should weigh on the growth in the first quarter of 2022.
It should also be slowed down by the Omicron variant which weighed heavily on the workforce. Airlines have had to cancel thousands of flights, restaurants have reduced their opening hours, factories have curtailed their production. The International Monetary Fund (IMF) has lowered its growth forecast for the United States, expecting 4.0% for 2022, against 5.2% previously.
The Fund has indeed removed from its projections the benefits that Joe Biden’s “Build Back Better” investment plan, which provides for some 1.8 trillion dollars in social spending, could bring, because it stuck in Congress. The Fed is also forecasting, at this stage, 4.0% growth in 2022.