Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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U.S. Economy hits highest levels in 40 years, will strong GDP growth continue in 2022?

The U.S. Department of Commerce report showed that the U.S. GDP grew at an annualized rate of 6.9% in the fourth quarter of 2021. The figure was slightly higher than the consensus forecast of 5.6%, marking the sixth consecutive quarter in which the United States economy has grown. As a result, the U.S. economy is expected to grow 5.7% for the entire year in 2021, outpacing the 3.4% growth achieved in 2020. It was also the highest GDP increase since 1984.

Statistically, the strong growth of the U.S. economy last year reflects the overall growth in consumer spending, non-residential fixed investment, exports, residential fixed investments and private inventory investment. A single sector did not drive economic growth. Consumer demand continues to exhibit strong growth among the different sectors, and companies have been continuously replenishing inventories to meet rising demand.

U.S. consumer spending grew at an annualized 3.3 percent last year, up from 2 percent in the third quarter. After a sharp 25% contraction in the third quarter, spending on durable goods rose 1.6% in the fourth quarter. Services grew by 4.7%, led by healthcare, entertainment and transport services.

 

Will stable growth of economy continue to hold throughout 2022?

The Fed's quarterly economic forecasts show that the U.S. economy will grow 5.5% in 2021 (slightly higher than estimated) before slowing to 4% in 2022. With the start of the interest rate hiking cycle, the US economy will enter a more moderate expansion period in the future, further limiting the level of potential economic growth, with the inflation rate expected to fall gradually. Nevertheless, most economists believe that the U.S. economy will keep growing in 2022, as it is expected to grow by more than 4% this year.

However, we cannot underestimate the risk factors facing the U.S. Inflation has become the primary constraint on the current economic growth in the United States. Hence, the Federal Reserve has promised to implement several interest rate hikes to contain inflation. As a result, U.S. inflation hit a 40-year high of 7.5% in January 2022, as consumer confidence fell to its lowest point.

Goldman Sachs was slightly pessimistic about the outlook for the U.S. economy and recently lowered its forecasts again. The leading investment bank lowered its 2022 GDP forecast to 3.4% from the previous 3.8%, citing that the U.S. economy is facing more obstacles than expected. These include the withdrawal of fiscal stimulus, the continued spread of COVID-19 variant viruses, and the impact of multiple rounds of interest rate hikes to curb rising inflation. Considering the combined effect of these factors, it is not impossible to see the US economy fall below the weak levels of economic growth registered in 2020.

Last Updated: 24/02/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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