US GDP Rises 6.9% in Q4, Trouncing Growth Forecasts Amid Omicron

  • US gross domestic product grew at an annualized rate of 6.9% in the fourth quarter of 2021.
  • That exceeded the median estimate of a 5.5% jump and was a huge pickup from the prior quarter’s 2.3% growth.
  • The final months of 2021 saw the Delta wave subside before Omicron fueled an even worse virus surge.

The US economic recovery picked up the pace in the last months of 2021 as the Delta wave faded and the Omicron variant became the latest threat to the rebound.

The country’s gross domestic product grew at an annualized rate of 6.9% through the fourth quarter of last year, the Commerce Department said Thursday. That came in way above the median forecast of a 5.5% gain from economists surveyed by Bloomberg. It also showed growth accelerating from the 2.3% pace seen in the third quarter.

The print brings economic growth back in line with the levels seen earlier in 2021. The third quarter saw growth sharply slow as federal aid programs dried up, the labor shortage lingered, and the Delta wave hit its peak. The growth rebound suggests the economy is far more resilient to the virus than during previous resurgences.

Several major headwinds continue to hold the recovery back. The fourth quarter saw virus cases rip higher as Omicron’s spread intensified, yet the period doesn’t capture the worst of the latest wave. Daily virus cases peaked with more than 1.4 million new infections on January 10, and while counts have declined since, the current 7-day average is still roughly twice the level seen at the end of last year. As such, economists won’t get the full picture of Omicron’s fallout until first-quarter GDP data is published.

Tangles in the global supply chain also hindered output, albeit not as much as in the third quarter. The last three months of 2021 saw modest improvements to the supply-chain problem, with key factories ramping up production and shipping delays shrinking. Bottlenecks are “easing in all the right places,” and it’s likely the US is past the worst of the supply mess, JPMorgan economists said in an early January note.

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