US: Economy grows by 6.9% on an annualized basis in 4Q21


US real GDP grew by 6.9% YoY in 4Q21, well above the expected 5.5% pace, according to the first reading. This was a sharp acceleration from the 2.3% growth rate of 3Q21. In addition to the increase in exports, the acceleration in stock investments and consumer expenditures was effective in the acceleration in 4Q21. In 4Q21, COVID-19 cases caused continued restrictions and disruptions to the operations of organizations in parts of the country. Government aid payments in the form of donable loans to businesses, grants to state and local governments, and welfare benefits to households have all declined as the provisions of various federal programs expire or are reduced. For the full year 2021, real US GDP growth was 5.7%, the strongest since 1984.


If we look at the sub-items; The increase in real GDP primarily reflected increases in private inventory investment, exports, personal consumption expenditure (PCE) and non-residential fixed investment, partially offset by decreases in both federal and state and local government spending. The GDP price index, which measures the annual change in the prices of all goods and services included in GDP calculations, rose 7% in 4Q21, above market expectations of 6%. The PCE price index rose 6.5%. Excluding food and energy prices, the PCE price index rose 4.9%. The increase in PCE reflected an increase in services, primarily led by healthcare, entertainment and transportation. The increase in private inventory investment primarily reflected an increase in wholesale trade (mainly in durable goods industries). The increase in exports of goods was widespread and the leading contributions came from consumer goods, industrial materials and food. Travels led the increase in service exports.


When we look at the deflator effect, it should be underlined that there is a supply problem intertwined with consumption. It is still a compelling effect in terms of general profile. On the other hand; The high growth contribution continues to come from stocks. It is an important detail as it shows that consumption remains high in an environment where production is at risk of slowing down. The said factor, on the other hand, has an explanatory effect on the volatility and height factor in price indices. As for the interpretation of growth alone; Since the previous period belongs to 4Q21, a time period that the leading indicators paint a picture will mean that the Fed does not consider it as a criterion.

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