WASHINGTON— The U.S. economy rebounded in the fourth quarter and grew by 6.9%, according to the first estimate of economic activity for year-end 2021 from the Commerce Department.
NAFCU’s Curt Long the data for Q4 represent a return to "its pace over the first half of the year."
"The biggest factor behind the improved growth rate was inventory build, which accounted for over 70% of the total rise in quarterly GDP," said Long, NAFCU's chief economist and vice president of research. "Auto dealers led the way, which is a good sign that some of the supply chain-related shortages in that industry may be easing.
"Consumption improved at a modestly faster pace than in the prior quarter, with most of the improvement located in the services sector," added Long. "Durable goods spending increased by 18% in 2021, but by only 1.6% in the fourth quarter."
Other Major Contributors
According to the estimate, major contributions to real GDP came from gross private domestic investment (+5.2%), followed by personal consumption (+2.3). Net exports remained flat while government consumption fell by 0.5%.
PCE inflation, the Fed's preferred inflation metric, rose 6.5%. Meanwhile, core PCE inflation, excluding food and energy, rose 4.9%.
"First quarter growth faces more headwinds, including the omicron variant, drags in fiscal spending, and jittery financial markets," Long concluded. "NAFCU expects growth to slow, which should ease inflationary pressures."