Economy grew 2.1% in 2022, holding up through inflation and interest rate hikes
by Zachary Halaschak, Economics Reporter |
January 26, 2023 08:32 AM
The economy grew 2.1% in 2022, the Bureau of Economic Analysis reported Thursday, a year marked first by recession fears and then by the largest burst of inflation in decades, which prompted a frantic campaign by the Federal Reserve to ease price pressures through interest rate hikes.
The numbers, adjusted for inflation, were driven by GDP growth in the second half of the year after the first half saw a contraction that led many to say that the economy had fallen into recession on President Joe Biden's watch. GDP growth for the fourth quarter clocked in at a 2.9% annual rate, the bureau said.
Last year’s GDP growth follows 2021’s gangbuster 5.9% GDP growth, which was so unusually high because it marked a year of reopening from the pandemic.
Some details of Thursday's report, though, suggest that underlying growth in the quarter was not as strong as the headline number made it out to be. Business additions of inventories, which is not indicative of future growth, boosted the headline growth rate by a full 1.46 percentage points. Meanwhile, business investment slowed, as did household spending. Housing construction cratered at nearly a 27% annual rate as the Fed's rate hikes take a massive toll on home buying and construction.
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https://www.washingtonexaminer.com/policy/economy/economy-grew-2-1-in-2022-amid-barrage-of-interest-rate-hikes