GDP Jump 6.9% in Q4

After a disappointing third quarter, the economy came roaring back in 2021 to help the economy grow at the fastest clip in almost 40 years…(Bureau of Economic Analysis)

• Real gross domestic product (GDP) increased at an annual rate of 6.9% in Q4, following an increase of 2.3 percent in the third quarter.

• Economists had projected a smaller growth of 5.5% in the 4th quarter.

Thanks to the 4th quarter, real GDP saw growth that we haven’t seen since 1984…

• Real GDP increased 5.7% for the year, following a 3.4% decline in 2020.

• Economists had projected a slightly higher growth rate of 6.0% for 2021.

It wasn’t all good news, though. With a hot economy comes price hikes that were even higher than expected…

• The GDP price index reported a 6.9% increase while economists had only projected a 6.0% increase.

• The PCE price index was up 6.5% in Q4, with PCE excluding food and energy up 4.9%.

Consumption increased 3.3% thanks to a big increase in services (4.7%) and a slight increase in goods (+0.5%).

• From a real estate perspective, spending on residential fell 0.8%, after a 7.7% decline in Q3, and an 11.7% decline in Q2. In fact, residential was actually a drag on GDP in Q4 pulling 0.03 off the final number.

Overall, this is a good report as stated by Neil Irwin at Axios: “The numbers show just how far the economy came toward recovery in 2021, even with all the challenges that stood in the way of a full reopening.”