Year of Distortions, Shortages, Massive Inflation, Worst Trade Deficits Ever, and Hyper-Stimulated Growth Ends with a Bang

by Wolf Richter
Wolf Street

But companies were finally able to rebuild some woefully low inventories in Q4.

GDP is adjusted for inflation to get “real” GDP by expressing everything in “chained 2012 dollars.” In this manner, real GDP in all of 2021 jumped to $19.43 trillion, up by 5.7% from a year earlier, the fastest annual growth since 1984, according the Bureau of Economic Analysis today.

This was a historic year, in terms of inflation, hyper-stimulated economic growth, trade deficits, and distortions, such as the labor and materials shortages. In the decade from 2010 through 2019, annual real GDP growth averaged 1.9% and never quite reached 3% in any single year. A range between 2% and 3% growth is now considered good and sustainable for the US economy – without running into the distortions now bedeviling the economy, where business are hobbled by not being able to get what they need, and consumers are confronted with some empty shelves, nearly empty lots at new vehicle dealers, and soaring prices.

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