The economy grew slightly faster than had been earlier estimated.
The American economy grew at an annual rate of 7% in the fourth quarter, the Bureau of Economic Analysis reported on Thursday.
The rise in the nation’s gross domestic product was up slightly from the earlier estimate of 6.9% and compares to 2.3% in the third quarter.
“The updated estimates primarily reflected upward revisions to nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by downward revisions to personal consumption expenditures,” the report said.
While the economy ended 2021 on a strong note, it is expected to cool significantly in 2022 as higher interest rates and the lack of the effects of multiple rounds of fiscal stimulus during the coronavirus pandemic slow down consumer spending.
The Federal Reserve has committed to raising interest rates, most likely next month, to blunt rising inflation, which is running at an annual rate of 7.5%. Higher energy prices and continued shortages of key goods are also slowing down spending.
Still, with economists forecasting 2022 growth at 3.5%, that would still be a level of activity above pre-pandemic levels.
Geopolitical tensions could upset that forecast, with Russian President Vladimir Putin launching an invasion of Ukraine late Wednesday. Stock markets around the world sold off, with the Dow Jones Industrial Average futures down more than 800 points in pre-market trading. And the price of oil surged above $100 a barrel. Russia is a leading producer of oil and natural gas.
Separately, the Labor Department reported that first-time claims for unemployment benefits fell to 232,000 last week, down 17,000 from the prior week’s revised level.
The four-week moving average, meanwhile, was 236,250, a drop of 7,250 from the previous level.