Gross domestic product (GDP) growth in the United States was lower than previously estimated in the fourth quarter from 2021 and revised downward to 6.9%, according to the third and last quote of the Bureau of Economic Analysis (BEA).
The revision was down from the second estimate of 7%, but higher than the 2.3% GDP increase in the third quarter, the BEA said. It added that the updated estimate was “based on more complete source data” than previously available.
Fourth-quarter GDP was driven primarily by increases in private inventory investment, personal consumption expenditures (PCE), and exports, which were partially offset by declines in federal, state, and local government spending.
Although the BEA’s revised estimate of economic activity is lower than its previous estimate, the 6.9% economic growth rate remains strong for today’s economy. Consumers who want to take advantage of interest rates ahead of the Fed’s next rate hike may want to consider refinancing their private student loans. Visit Credible to find your personalized interest rate without affecting your credit score.
Investments by car dealers boost GDP, says BEA
Private investment in inventory helped drive real GDP growth in the fourth quarter of 2021, led by business investments made by motor vehicle dealers, according to the BEA.
The demand for new cars continues to rise as some drivers are waiting six to nine months just to get their new vehicles and dealers are facing record inventory levels. In fact, total new vehicle sales were forecast to reach almost 1.25 million cars in December 2021, down 20.5% from the previous year. according to a statement from JD Power.
“Retailers continue to sell most vehicles almost as soon as they hit inventory,” Thomas King, president of data and analytics at JD Power, said at the time of the statement. “This December, a record nearly 57% of vehicles will be sold within 10 days of arriving at a dealership, while the average number of days a new vehicle sits on a dealership lot before being sold is about to drop to 17 days, an all-time low, and down from 49 days a year ago.”
Car prices are hitting new highs as the median price of a new vehicle topped $45,000, according to JD Power. This occurs when the cost of living increases due to high inflation numbers, and national income has not been able to keep pace with rising market prices. What’s more, a recent Edmunds report found that a record 82.2% of people who bought a new car paid above the sticker price in January, compared to just 2.8% a year ago.
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Consumers can expect GDP to start to decline: expert
The GDP growth rate increased from the third to the fourth quarter of 2021, but it could take a turn and start to decline in the next year due to the Federal Reserve’s announcement that it will raise interest rates this year.
the central bank high interest rates in March for the first time since 2018, adding that Further rate increases are likely to be needed through the remainder of 2022 and into 2023. At the time of the announcement in In March, an expert said future rate hikes are likely to slow economic growth in the coming year.
“The Federal Reserve signaled multiple increases to the fed funds rate throughout the year, projecting it to reach 1.9% by the end of 2022, revising its December projection by a full percentage point,” said Dawit Kebede, senior of the National Association of Credit Unions (CUNA). economist. “This will increase the cost of borrowing for consumers and slow spending. Consumer spending contributes to two-thirds of gross domestic product, the value of all goods and services in the economy. GDP growth projections will also decline with the increased federal funds. qualify.”
If you’re looking to take advantage of interest rates before they rise further in 2022, you could consider refinancing your mortgage to lower your monthly payment. Contact Credible to speak with a home loan expert and get answers to all your questions.
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