The Federal Reserve’s new survey suggests that the economy is still growing, even with the ongoing COVID-19 pandemic, as well as lingering problems that have negatively impacted economic growth as a whole. This survey showed that the economy was still growing at a modest, if slowed down, pace by the end of 2021. Economists theorize that the economy will continue to grow at this pace in the beginning of 2022.
This new survey also shows that while the economy is growing across the nation, some areas are slowing down more than others. New York, for example, has recorded a much slower pace of economic growth than other areas around the United States at the end of the year. Across the nation, growth has slowed down, though, more than likely because consumers have slowed down in spending at the very end of the year.
While the holiday shopping season still allowed many businesses to perform well, many consumers shopped earlier than normal this year for presents and gifts. This may have tampered down some expected economic growth at the very end of the year.
Labor shortages, material shortages, and the global supply chain continue to negatively impact the United States’s economic growth as a whole. These problems will likely continue into most of 2022. While these problems may continue to keep economic growth down some, it likely won’t make growth stop as a whole.
The COVID-19 pandemic could change things, especially as it has become a fluid, everchanging pandemic. The Omicron variant, which is highly contagious, has caused infections and hospitalizations to surge around the country. If this variant continues to infect people at a high rate, then economic growth could slow down even more in the coming months.
The Federal Reserve survey, conducted at the end of the year, only shows the beginning stages of the Omicron variant’s spread. Economists believe that the variant could negatively impact the economy, especially if it hinders workers and employers.
This new survey also found that the need for employees remains very high. Many businesses and employers need and want new hires, yet they aren’t able to find these qualified workers. Many economists are optimistic that the beginning of 2022 will continue to see workers returning to the workforce. If this happens, this will help with economic growth in the new year.
Consumer demand remains strong, even with some consumers slowing down their spending. If demand remains strong, the economy will continue to grow, even with the ongoing labor shortage. However, the continuous spread of the Omicron variant could begin to hinder manufacturing, and possibly even continue to affect the global supply chain. If the variant impacts goods and how they are shipped, then this could impact growth.
This latest survey also comes amid record-high inflation, leaving many Americans having to pay high prices for gas, food, and more. While it does appear that high inflation will persist, the Federal Reserve is optimistic that inflation will not get any higher and will instead moderate in 2022.