Us GDP will exceed $23 trillion in 2021, with nominal growth of 10%, the highest since 1984!

2022-06-26 0 By

The economic figures for 2021 are out for both superpowers, China and the US.China’s GDP in 2021 will be 114 trillion yuan, up 11% in nominal terms and 8.1% in real terms from 102 trillion yuan in 2020.The US GDP in 2021 is us $2.304 billion, up 10% in nominal terms and 5.7% in real terms from US $20.89 trillion in 2020, hitting a 38-year high.In 2020, China’s GDP was 14.72 trillion US dollars, 6.17 trillion US dollars behind that of the US, accounting for 70.46% of THE US GDP.In 2021, China’s GDP will be about us $17.7 trillion, narrowing the GAP with the US GDP to US $5.3 trillion, 76.94% of the SIZE of the US economy.China’s economy is steadily catching up with America’s in size.The US economy will grow by 5.7% in real terms in 2021, the highest since 1984, according to the first estimate released by the Commerce Department.The US economy grew 0.3% in real terms in the first quarter of 2021, with a GDP of $5.36 trillion.The second quarter saw record high growth of 12.6 per cent to $5.71tn, driven by massive stimulus measures and a low base effect from the same period last year.In the third quarter, the US economy continued to recover, with real growth of 4.7% and GDP exceeding $5.82 trillion.In the fourth quarter, the US economy grew by 6.9% in real terms, with its GDP reaching $6.14 trillion, as the number of jobs continued to increase, import and export continued to increase, and COVID-19 restrictions were gradually eased.It was the first time in U.S. history that GDP exceeded $6 trillion in a single quarter.Along with the new record size of the economy, the U.S. also hit a new high of $69,400 in GDP per capita in 2021.The global supply chain has been disrupted and container ships have been jammed at ports on the WEST Coast of the US. As a result, the prices of food, housing, energy and automobiles in the US rose sharply last year, with inflation hitting a 40-year high in December.The US consumer price index rose 0.5 per cent in December from the previous month and 7 per cent from a year earlier, the biggest year-on-year rise since June 1982, according to the Labour Department.Housing costs rose by 4.1 per cent and food prices by 6.3 per cent.New car prices rose 1 percent month-on-month, the ninth straight month-on-month increase.Used car prices rose 3.5 percent month-on-month and 37.3 percent year-on-year, while energy prices rose 29.3 percent year-on-year.December’s rise was mainly due to higher used-car prices and housing costs.Core CPI, which excludes food and energy prices, rose 0.6 per cent from the previous month and 5.5 per cent from a year earlier, also the biggest year-on-year rise since February 1991.The US GDP grew at an annualized rate of 6.9% in the fourth quarter of 2021, 3.1% higher than the pre-COVID-19 level.That compares with China’s 4% growth in the fourth quarter.So much so that Joe Biden, America’s president, enthused that it was the first time in 20 years that America’s economy had grown faster than China’s.To be specific, personal consumption expenditure, which accounts for about 70% of US GDP, increased by 3.3% in the fourth quarter of 2021, boosting economic growth by 2.25 percentage points.Non-residential fixed asset investment, a measure of corporate investment, rose 2%, accelerating from the previous quarter.Private inventory investment increased, contributing 4.9 percentage points to the economy in the quarter.According to the US Commerce Department, the goods trade deficit in December 2021 hit a record high of $100.96 billion, up 3% from November 2021 when the goods trade deficit was $97.8 billion.The GOODS trade deficit rose to $1.08 trillion in 2021, up from $893.5 billion in 2020.The December deficit was driven by strong domestic demand and continued strong growth in imports.Imports rose for the fifth consecutive month in December.Total US goods imports rose 2 per cent to a record $258.3bn in December, helped by record imports of consumer goods, while goods exports rose to $157.3bn.The INTERNATIONAL Monetary Fund (IMF) on Thursday sharply lowered its economic growth forecast for the United States this year, forecasting that ITS GDP will grow by 4% in 2022, 1.2 percentage points lower than its previous forecast.However, many economists are still optimistic about the US growth rate, and even believe that the US will surpass China’s growth rate in 2022, due to robust domestic consumption and surging inventories.Since March 2020, the Federal Reserve has kept its benchmark interest rate near zero in response to the economic recession caused by the pandemic.But recent Fed officials have made it clear that the Fed will raise rates three times in 2022.Economists generally expect the Fed to raise rates four times this year, with the first move coming as early as March.The Fed intends to raise interest rates to get US inflation down to 2% by 2022.Although inflation will fall as supply chain tensions and supply and demand balance gradually;But with prices for many goods and services still higher than pre-pandemic levels due to higher labor costs and input prices, and housing prices still pushing up inflation in 2022, the Fed’s target could be difficult to achieve.America’s red-hot economy, with record inflation, makes a fed rate hike inevitable.It also raises the risk of a pullback in U.S. stocks, which have risen too much in the past two years because of monetary easing.In fact, the U.S. stock market has been on a downward trend since the beginning of 2022, and has been on a downward trend in recent days.The Dow Jones Industrial Average has retraced 11.3% from its high of 36,952.65 on Jan. 5, 2022, to 33150.33 on Jan. 24.The Nasdaq fell 19.23% from a high of 16,212.23 on Nov. 22, 2021 to 13,094.65 on Jan. 24.From November 2015 to February 2016, and from October to December 2018, the United States also faced the macro background of economic slowdown and strong interest rate hike expectations, which led to the deep correction of the three major U.S. stock indexes in these two periods, during which the S&P 500 index fell 13.3% and 19.6% respectively.Due to the unprecedented monetary easing by the Federal Reserve during the pandemic, there will be plenty of room for a correction in THE US stock market this year.————– Shanglin Institute: Yang Fei, PhD in economics, university teacher, in-depth observation of industrial economy and financial events.