The US economy grew at its fastest pace in nearly 40 years

 The US economy grew at its fastest pace in nearly 40 years

The US Department of Commerce on January 27 said that the country's GDP grew by 5.7% last year - the highest since 1984.

GDP in the last quarter of last year also increased by 6.9% - exceeding analysts' forecasts. This is a significant improvement from the previous quarter, when GDP grew by only 2.3%. In fact, the last three months of last year also had the best performance since the third quarter of 2020 – when the economy boomed thanks to the reopening.

US President Joe Biden has praised this growth. "The GDP figures for my first year in office show that we are building an American economy for the 21st century, with the fastest growth in nearly four decades and the best job growth in history. It's also the first time in 20 years that the US economy is going faster than China's. China's GDP in the last quarter of last year increased by 4% year-on-year.

However, the US economy last year not only had a fast growth rate. The country also faces supply chain disruptions, labor shortages, and soaring demand that has driven prices up.

Consumption last year increased by 7.9%, thanks to active Americans spending and rising prices of goods and services. This was the strongest increase since 1946. The consumer price index (CPI) increased by 3.9% - the strongest since 1990.

In the fourth quarter, the country's inflation was 6.5% - the highest since the third quarter of 1981.

However, last year's strong rally probably won't last into this year. The US economy is facing a fast-spreading strain of Omicron, which puts pressure on businesses in the second half of December. Therefore, this development has not been recorded in last year's data.

"Omicron started to hit the last month of last year and will certainly have a strong impact on economic activity in the first quarter of this year," forecast Joe Brusuelas, chief economist at RSM US.