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United States GDP Q4 2021

United States: Economic growth records fastest upturn since Q3 2020 in Q4

GDP growth accelerated to 6.9% in seasonally-adjusted annualized rate terms (SAAR) in the fourth quarter, from 2.3% in the third quarter. Q4’s reading marked the best result since Q3 2020.

The upturn reflected stronger domestic demand growth. Household spending growth improved to 3.3% SAAR in Q4 from 2.0% in Q3. Moreover, fixed investment rebounded in Q4, growing 1.3% and contrasting the 0.9% contraction logged in the prior quarter. Government spending, meanwhile, dropped 2.9% (Q3: +0.9% SAAR).

Exports of goods and services rebounded in the fourth quarter, growing 24.5% in seasonally-adjusted annualized terms, which marked the best reading since Q3 2020 (Q3: -5.3% SAAR). In addition, growth in imports of goods and services sped up to 17.7% in Q4 (Q3: +4.7% SAAR). Consequently, the external sector had a neutral impact on overall GDP growth in the quarter, which was an improvement from the 1.3% subtraction logged in Q3.

On an annual basis, economic growth improved to 5.5% in Q4, compared to the previous quarter’s 4.9% expansion.

Commenting on the short-term outlook, Leslie Preston, director and senior economist at TD Economics, noted:

“Abstracting from the inventory swings, final domestic demand is likely to be stronger in the first half of 2022 than it was in the latter half of 2021, underscoring an economy that no longer requires emergency levels of monetary stimulus.”

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