In 2021, the U.S. economy grew by 5.7% and had its strongest performance since 1984, according to The Washington Post. The economy had contracted 3.4% in 2020, which was the biggest drop in 74 years.
Government spending reportedly helped propel the economy in 2021, even as a surge in new COVID-19 cases and deaths during the second half of the year created additional pressures. The economy grew at a 6.9% annual rate from October 2021 to December 2021, which was a sharp acceleration from 2.3% in the previous quarter.
Although a record 6.4 million jobs were created in 2021, the year also brought the highest inflation in 40 years and created significant supply chain issues. To combat rising prices, the Federal Reserve is preparing for interest rate hikes this year.
A survey by Wolters Kluwer’s Blue Chip Economic Indicators shows economists expect the economy to grow 3.9% in 2022, which would represent a second consecutive year of strong growth.
“While we have reached the end of pandemic-era fiscal and monetary policy, the pandemic is not yet over,” said Joe Brusuelas, chief economist at RSM. “The rate hikes that are now clearly in play will show up in the final quarter of the year, slowing growth. The U.S. consumer and investment in the housing sector will continue to be the primary engine of growth as the economy transitions away from pandemic-era fiscal and monetary support.”
