WASHINGTON, Jan. 27 (Xinhua) -- The U.S. economy grew at an annual rate of 6.9 percent in the fourth quarter of 2021 amid a surge in inventories, the U.S. Commerce Department reported Thursday.
"In the fourth quarter, COVID-19 cases resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country," the department's Bureau of Economic Analysis (BEA) said in an advance estimate.
"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 report noted.
The increase in real GDP primarily reflected increases in private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment that were partly offset by decreases in both federal and state and local government spending, the report showed. Imports, which are a subtraction in the calculation of GDP, increased.
In the third quarter, real GDP increased 2.3 percent amid the Delta variant-fueled COVID-19 surge and continued supply bottleneck, the BEA data showed.
Real GDP increased 5.7 percent in 2021, following a decrease of 3.4 percent in 2020.
Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis that "savor the flavor because it will not last."
"The details behind the better-than-expected headline point to a slowing in spending and a back-up in inventories," Quinlan and Seery said. "Without the boost from inventories, GDP would have been just 2.0 percent in Q4."
"Not knowing what was coming in terms of the pandemic, many retailers stocked up in anticipation of strong holiday sales and businesses continued to pull out all the stops to source much needed inventories," they noted.
But after a strong October and decent November, retail sales ended the year with a flop in December, according to the analysis.
Diane Swonk, chief economist at major accounting firm Grant Thornton, highlighted the shortage of computer chips.
"Vehicle producers in the US have already had to shut some plants temporarily in January, as chip shortages worsened," Swonk said in a blog published Thursday.
"Those losses, combined with the large disruptions due to both demand and supply from the Omicron variant, suggest a slow start to 2022," said Swonk.
Her economic team's forecast is for real GDP to come to "a near halt," with an annualized growth rate of little more than 1 percent in the first quarter of 2022.
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