Ridin' With Biden, Con't

America's economy grew at the fastest pace in nearly 40 years but I'd bet you a majority of Americans believe we're in a recession right now thanks to our broken media.

The U.S. economy grew by 5.7 percent in 2021, the fastest full-year clip since 1984, roaring back in the pandemic’s second year despite two new virus variants that rocked the country.

The growth was uneven, with a burst of government spending helping propel a fast start, even as a surge in new cases and deaths in the second half of the year created new pressures. The economy grew by 6.9 percent from October to December, the Bureau of Economic Analysis said Thursday, a sharp acceleration from 2.3 percent in the previous quarter.

In a powerful rebound from 2020, when the economy contracted by 3.4 percent — its worst result since 1946 — 2021′s strong growth created a record 6.4 million jobs. But it also brought a host of complications, helping fuel the highest inflation in 40 years and creating supply chain snarls as consumers hungry for products overwhelmed the global delivery system. To beat back rising prices, the Federal Reserve is now shifting its strategy and preparing for interest rate hikes this year, convinced it has given enough support to help the labor market and now must keep the economy from overheating further.

Although the omicron variant had begun surging by the end of 2021, economists didn’t expect to see any fallout in Thursday’s data. Rather, forecasters anticipated that the GDP report would represent a year of blockbuster growth despite the unpredictability of the pandemic economy, from labor shortages to supply chain backlogs to inflation.

Earlier in the year, economists worried that global supply chain problems would keep businesses from being able to fully stock shelves. But a rush by companies in the final months of 2021 to bolster their inventories ultimately drove GDP much higher.

Many, such as Georgia hospitality software firm Agilysys, are building up inventories to guard against disruptions in supply chains. The company, which specializes in technology such as hotel check-in systems, has increased its inventory levels by 175 percent in the past nine months to “mitigate supply chain risk,” Chief Financial Officer Dave Wood said on a recent earnings call.

But even that silver lining comes with the reminder of how parts of the economy remain extremely disrupted.

“We’re hitting on all cylinders producing goods, and that’s good,” said Ben Herzon, executive director at IHS Markit. “But it’s also bad, because the economy wasn’t really set up to produce goods at the level that it’s producing now. That’s one of the reasons we’re seeing some of the problems on the supply side.”

 

But you'd think we were in worse shape now than in the Trump Depression.