Biden touts GDP growth, but inflation tamps down celebration

by mcardinal

Willie R. Tubbs, FISM News

 

A Thursday report from the Bureau of Economic Analysis gave President Joe Biden a much-needed piece of positive news, but experts say that the outlook isn’t as rosy as the White House claims.

According to a release by the BEA, the United States’ gross-domestic product grew by about 6.9% in 2021, a number that outpaced the 5.5% number many experts predicted. It also marked a 37-year high.

The Biden administration released a statement, patting themselves on the back for the economic growth:

The GDP numbers for my first year show that we are finally building an American economy for the 21st Century, with the fastest economic growth in nearly four decades, along with the greatest year of job growth in American history. And, for the first time in 20 years, our economy grew faster than China’s.

The President is expected to champion this growth in the coming days and is no doubt hopeful the news will lead to an improvement in his staggeringly low poll numbers. Numerous experts, though, warned that the growth was not as positive an indicator as one might think.

Part of the reason for the jump in GDP was that prices soared thanks to inflation, supply chain issues, and shortages.

“It’s kind of hard to be cheerful when there’s still a pandemic raging,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told the New York Times, adding, “pocketbook issues really are important.”

Other experts warned that the growth seen in 2021 might be the harbinger of a substantial slowing in 2022.

“The pace of economic momentum has slowed in recent weeks due to the impact from the Omicron variant,” Sam Bullard, Wells Fargo managing director and senior economist, told Yahoo!News. “Add on the expiration of the monthly Child Tax Credit and ongoing challenges to the supply chain (labor, material and transportation), first quarter GDP growth looks to have decelerated substantially — our call 2.9%.”

Other experts predict that GDP might falter early in the year but rebound later.

“While Omicron will lead to weaker growth in the first quarter, activity is expected to rebound nicely once the latest pandemic wave abates and supply-chain glitches ease,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Reuters.

The president is scheduled to speak Friday in Pennsylvania about economic developments that have occurred under his watch.

DONATE NOW