America's GDP closed out 2021 much stronger than was expected by analysts. The estimate which was stated was 5.5%, but the actual GDP sat at 6.9%. The reason that this increase was so surprising was due to the fact that the Omnicron variant of COVID-19 increased its number of cases greatly. Typically, this would lead to less workers and less consumption due to people staying in their homes. The 1.4% difference was obviously much higher than anyone thought it would be. Leading the way for the greater increase was consumer activity and business spending. These categories helped make 2021 the best full year of GDP since 1984. Unfortunately, the jobless claims stayed high at 260,000 and long-lasting goods orders hit their lowest point since April 2020. This likely signaled the end of the year slow down. Despite the signs that GDP acceleration slowed down at the end of the year, sizable boosts in inventory and consumer spending made sure that the US economy would stay strong. Along with the GDP, the sum of all goods and services increased. One thing that actually decreased was the pace of government spending which led to a slightly lower GDP. With all this news of strong gains in GDP, the stock market benefitted greatly. The stock futures posted gains which showed the solid grounds that the stock market stood on due to the increased GDP. The only problem with this high GDP is the high inflation rate that has accompanied it. Interest rates are likely to increase as well due to the high inflation rate.
https://www.cnbc.com/2022/01/27/gdp-grew-at-a-6point9percent-pace-to-close-out-2021-stronger-than-expected-despite-omicron-spread.html
Interest rates directly correlate with the inflation rate. This occurs because lenders will demand higher interest rates as compensation for the decrease in purchasing power of the money they are paid in the future. However, the stock futures posted gains was somewhat surprising considering COVID and people continued to invest in the market even when it was doing poorly.
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