US Economy Had Record Growth For 2021, Thanks A Lot, Biden
In another sign that the recovery from the pandemic recession is coming along quite nicely, thank you, the US Bureau of Economic Analysis reported today that the USA economy grew by 5.7 percent in 2021, and that's even with the bumps and rocky patches caused by the emergence of two new coronavirus variants. The Washington Post points out that, like so much of the coronavirus economy, the numbers were a bit crazy and zigzaggy, but headed in a good overall direction:
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 [...] 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.
The substantial growth, which WaPo called "the fastest full-year clip since 1984," also brought with it some problems, because as we've been saying all along, all of the economic stats since the start of the pandemic in March 2020 should probably have asterisks next to them. The strong economic growth
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 even further.
Still, the economy is doing far better than forecasters were predicting it would a year ago. On Twitter, Harvard economist Jason Furman, who formerly served as the chair of Barack Obama's Council of Economic advisers, wrote,
GDP growth dramatically outpaced forecasts made a year ago. Most forecasters expected the economy to grow 3 to 4 percent this year. Instead it has grown 5.5 percent. That is more than a percentage point faster than even the most optimistic forecast was expecting.
He accompanied that with this chart is from the Peterson Institute for International Economics, where Furman is a Senior Fellow, even though he's only 51. We're sure the outfit just loves pointing out that even its line graphs are #PIIE Charts. Economists are a witty bunch, tell you what.
And while inflation and supply chain problems are real, the Post points out that some fears from early on in 2021 didn't quite materialize:
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, as companies started to refill empty storerooms.
Oh dear. Time for someone on Fox News to insist that grocery store shelves are completely empty and it's all Joe Biden's fault. I know that when the soda dispenser at the Maverick mini-mart was out of Coke Zero the other day, I cursed Biden under my breath as I made do with Diet Coke. It's like we're all living in Moscow! (I kid; I never make it up to the University of Idaho.)
The Post also 'splains how GDP growth is calculated, so that even a liberal arts PhD like me can understand:
GDP, which measures the value of all goods and services produced in the economy, is typically reported after adjusting for inflation. Without inflation, growth in 2021 would have been 10.0 percent, meaning a significant portion of the year’s increase was absorbed by rising prices.
And here is a chart. Notice that the ratio of growth (dark green) to inflation (light green) last year isn't anything like the great big gap between the two rates in the 1970s, a thing to keep in mind when you hear people saying Joe Biden is doomed, just like Jimmy Carter all over again.
Source: Washington Post
Also too, the Post reports, economic numbers guy Ben Herzon, executive director at numbers company IHS Markit, says the inflation problem is significantly offset by the stimulus the government pumped into the economy last year, which as we keep pointing out made it possible for people to ride out the recession in generally good shape. Far better to have a solid economy and some inflation than to have a dragging recovery and no inflation.
In conclusion, the pandemic recovery is coming along pretty darn well! US manufacturing is strengthening, creating lots of jobs, the kinks in the supply chain will eventually be resolved, and before you know it, we'll be ready for another Republican president to throw it all in the shitter again, YAY!
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