A new Commerce Department report reveals that the United States economy grew 5.7% in 2021, the fastest growth recorded in 1984 (which recorded at 7.2% growth). While many economists forecasted that the country was on the path to reach a record of growth quickly, many problems arose which threatened this growth, most notably two new coronavirus variants which impact businesses, demand, and business activity. However, after a dismal 2020, businesses were able to find out new ways to meet consumer demand — and consumer demand as a whole surged as vaccines became readily available.
At the beginning of 2021, businesses weren’t necessarily doing too well, and employees were being laid off in mass waves because of the ongoing COVID-19 pandemic. Consumer demand wasn’t as strong as it would become, and the pandemic left many regulations and restrictions in place to help stop the spread of the virus. However, once spring and summer rolled out, as vaccines became readily available for most of the United States population, consumer demand surged, especially demand for restaurants and services.
After having to spend a lot of 2020 social distancing, people wanted to go out to eat and go to stores to shop. Consumer demand surged as a result, but not just for services. Demand for goods — and for homes, cars, etc — surged as well. Many factors likely resulted in this surge, other than the fact that Americans wanted to spend money after largely not doing so in 2020. It’s shown that many Americans ended up saving a lot of money in the early stages of the pandemic, so this likely allowed them to spend more money in 2021 once businesses started opening up more of their features, or locations.
The government stimulus checks received also likely helped play a role in the money that went into the economy, as Americans had more money to spend than normal. This all worked to keep consumer demand incredibly high — though some issues threatened to keep many consumers from getting the items or goods they wanted.
The global supply chain continued to be a problem, and really became a great one in 2021 once consumer demand surged and people became vaccinated. The supply chain, which was still struggling worldwide because of the pandemic, could not reach this quick surge in demand. As a result, the supply chain quickly became backlogged and bottlenecks ensued around ports in the country.
The ongoing labor shortage gripping the nation also continued. While economists thought that most workers would return to the workforce in the summer and early fall, this never quite happened. While many workers had returned to work by the end of the year, millions are still out of work for a variety of reasons. People are changing career paths and retiring at record levels, which may be one reason why many workers haven’t returned to the workforce in 2021.
Even with all of these problems, including the Delta and Omicron surges experienced, the economy still continued to grow very quickly.