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28 January 2022

How the US economy has roared back to life

GDP growth stood at 5.7 per cent in 2021, the highest rate since 1984.

By Nick Ferris

Joe Biden has endured a fraught first year as US president. On the international stage, the chaotic American withdrawal from Afghanistan dominated, while at home Biden’s flagship Build Back Better package has been left stranded in a gridlocked Senate.

With just 41 per cent of Americans now saying the president is doing a good job, the Democrats fear they will suffer a heavy defeat in November’s midterm elections. 

But January 2022 has brought the beleaguered president two pieces of good news. Firstly, the 83-year-old justice Stephen Breyer has announced his retirement from the Supreme Court, allowing Biden to fulfil his campaign promise of electing the first black female judge to the court. 

Secondly, the US recorded 5.7 per cent growth in GDP in 2021, the highest rate since 1984. Consumer spending, meanwhile, grew by 7.9 per cent: the highest rate since 1946. Biden has been quick to take credit for the performance, saying it is “no accident”. 

Of course, following periods of recession, economies tend to bounce back strongly. Given that 2020 saw the largest US recession in 74 years, perhaps the results are not surprising. Moreover, the $6trn of fiscal stimulus introduced by the government has contributed to inflation of 7 per cent, the highest rate since 1982. 

Nevertheless, it is notable that the recovery has been far stronger than that which followed the 2008 financial crisis, with the economy now 2 per cent larger than it was in 2019.

[See also: The stalled presidency: Why Joe Biden’s woes threaten calamity for the Democrats and the US republic]

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