Jan. 27 (UPI) — The U.S. economy saw substantial growth in the final three months of 2021 — and, for the entire year, saw the largest expansion in almost 40 years, the Commerce Department said in a highly anticipated report on Thursday.
The department released its report showing how the economy performed in the fourth quarter, which put together the growth picture for the entire year.
According to the report, U.S. gross domestic product — the total output of all goods and services — increased by 5.7% for all of 2021. That’s the largest growth for any year since 1984, when the figure was over 7%. On both occasions, the U.S. economy was rebounding from a recession.
For the final quarter, which covers October through December, economic growth was 6.9% — well above the 5.5% most economists predicted.
“The increase in fourth quarter GDP reflected the continued economic impact of the COVID-19 pandemic,” the department said in a statement. “In the fourth quarter, COVID-19 cases resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country. Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased as provisions of several federal programs expired or tapered off.”
The figure for the fourth quarter surpassed the third-quarter increase of 2.3%, which indicated to some experts that the economy may be cooling down.
Since July of 2020, at the peak of the first wave of COVID-19, the U.S. economy has grown for six consecutive quarters — including a 33% expansion in the third quarter of that year. Growth was almost 7% in the second quarter of 2021 and 6.4% in the first.
“The increase in real GDP in 2021 reflected increases in all major subcomponents, led by [personal consumption expenditures], nonresidential fixed investment, exports, residential fixed investment and private inventory investment. Imports increased,” the Commerce Department’s report said.
“The increase in PCE reflected increases in both goods and services. Within goods, the leading contributors were ‘other’ nondurable goods (including games and toys as well as pharmaceuticals), clothing and footwear, and recreational goods and vehicles.”
The top contributors over the past year were healthcare and the food and accommodations sectors. The department said increases in nonresidential fixed investment reflected increases in equipment and intellectual property products like software.
The report noted, however, that the positives were partly offset by a decline in structures across most categories.
Current-dollar GDP increased by 10%, or $2.10 trillion, in 2021 to a level of about $23 trillion. By contrast, 2020 saw a decrease of 2.2%, or $478.9 billion.
Thursday’s was the department’s first fourth-quarter estimate. A second and more complete estimate will be released on Feb. 24.