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.

Recent News
Start Trading Now !

Try our demo account for free to learn trading. When you’re ready, switch to a live account and start trading for real.

Popular posts

ATFX

The Firm has taken the decision to cease providing services to retail clients, with immediate effect. We are therefore unable to accept any applications.

Services to professional clients will not be impacted. For professional applications please contact [email protected]

ATFX

Restrictions on Use

Products and Services on this website https://www.atfx.com/en-ae/ are not suitable
in your country. Such information and materials should not be regarded as or
constitute a distribution, an offer, or a solicitation to buy or sell any investments.
Please visit https://www.atfx.com/en/ to proceed.

ATFX

使用限制

本网站的产品及服务不适合英国居民。网站内部的信息和素材不应被视为分销,要约,买入或卖出任何投资产品。请继续访问 https://www.atfx.com/en-za/

ATFX

使用限制

本网站的产品及服务不适合英国居民。网站内部的信息和素材不应被视为分销,要约,买入或卖出任何投资产品。请继续访问 https://atfxgm.eu/en/

ATFX

使用限制

本网站的产品及服务不适合英国居民。网站内部的信息和素材不应被视为分销,要约,买入或卖出任何投资产品。请继续访问 https://www.atfx.com/en/

ATFX

使用限制

本网站的产品及服务不适合英国居民。网站内部的信息和素材不应被视为分销,要约,买入或卖出任何投资产品。请继续访问 https://www.atfx.com/ar/

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/ar/ to proceed.
ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://atfxgm.eu/en/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en-au/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/ar/ to proceed.
ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en/ to proceed.

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://www.atfx.com/en-za/ to proceed.
ATFX

Restrictions on Use

Products and Services on this website are not suitable for Hong Kong residents. Such information and materials should not be regarded as or constitute a distribution, an offer, solicitation to buy or sell any investments.

使用限制: 本網站的產品及服務不適合香港居民使用。網站內部的信息和素材不應被視為分銷,要約,買入或賣出任何投資產品。

ATFX

Restrictions on Use

Products and Services on this website are not suitable for the UK residents. Such information and materials should not be regarded as or constitute a distribution, an offer, or a solicitation to buy or sell any investments. Please visit https://atfxgm.eu/en/ to proceed.

ATFX

Restrictions on Use

AT Global Markets (UK) Limited does not offer trading services to retail clients.
If you are a professional client, please visit https://www.atfxconnect.com/