Bears, begone. The fourth-quarter gross domestic product (GDP) growth was on the upside this morning, giving stocks a lift after a slumping January.
All this came amid the still-raging omicron variant, rumbles of war in Ukraine, dipping consumer confidence, and ebbing payroll increases—which have put many investors on edge. The economy expanded by 6.9% for last year’s final quarter, versus an expected—and some thought overly optimistic—5.5%. The 2021 fourth-period advance is a marked improvement from the third quarter’s anemic 2.3% level.
The market responded positively to the news, with the S&P 500 up 0.75% in morning trading, a break from the all-too-typical January slide: Wednesday was down 0.15%.
Helping the December-ending quarter’s rise was a good holiday shopping season. While December retail revenue was blah, a lot of people simply had done their buying earlier, in October, to get around looming goods shortages. Helping push up the GDP number was increased buying of consumer goods, industrial supplies and materials, and foods, feeds, and beverages. Imports swelled, as well. And it all came despite lower federal aid, as various programs expired.
For the entire year, the economy grew 5.7% in 2021, up from 3.4% in 2020, when the pandemic first appeared and lockdowns slowed activity.