U.S. Economy Grew At The Fastest Rate Since 1984 Last Year

Topline

Despite lingering Covid disruptions, the economy grew a better-than-expected 6.9% in the fourth quarter thanks to increases in consumer spending, exports and private investments—notching the fastest growth rate in nearly 40 years after the unprecedented pandemic drawback in 2020, the government said Thursday.

Gross domestic product accelerated at a rate of 5.7% last year after the unprecedented decline in … [+] 2020.

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Key Facts

Real gross domestic product beat expectations averaging 5.5% due primarily to increases in exports, personal consumption and nonresidential investments, according to an estimate by the Bureau of Economic Analysis on Thursday.

For the year, economic growth accelerated at a rate of 5.7%—the highest showing since 1984 after a 3.4% decline in 2020, the government said.

Inventory investments by motor vehicle dealers and widespread increases in exports—such as industrial supplies, food and beverages—were among factors leading economic growth despite offsets from minor decreases in both federal and state and local government spending.

Key Background

Widespread Covid lockdowns led to the U.S. economy’s worst annual performance since World War II last year. However, many restrictions were lifted this year as vaccinations became widely available to the public—ushering in a massive boom in business that triggered supply shortages and contributed to rapid inflation. Despite the economy’s better-than-expected performance last year, the International Monetary Fund cautioned on Tuesday that the economy would grow more slowly in 2022 due to lingering supply chain constraints, the Federal Reserve’s removal of pandemic-era stimulus and the nearly diminished likelihood that President Joe Biden will pass his $1.2 trillion social spending package, Build Back Better.

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