U.S. fourth quarter GDP grew at 6.9% annual rating, capping a strong 2021 recovery.

The view in the rear-view mirror is good, even as the windshield is a little foggy. The U.S. Commerce Department reports strong fourth quarter GDP growth, following a comparatively tepid third quarter.

Real gross domestic product (GDP) increased at an annual rate of 6.9 percent in the fourth quarter of 2021 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.3 percent.

The Wall Street Journal reports,

The U.S. economy grew rapidly in the fourth quarter of last year, advancing to a 6.9% annual rate, capping the strongest year of growth in nearly four decades as the country rebounded quickly from the pandemic-induced recession.

But growth recently has run into obstacles that could lead to much more modest growth this year, economists say.

Those obstacles are what makes the view through the windshield a bit murky. The WSJ elaborates.

Thursday’s report contained warning signs. Most of the growth owed to companies’ restocking rather than people and firms buying stuff. In part, the rise in inventory investment reflected a rebound from super-low inventory levels in the summer. Inventory levels remain low because of persistent shortages. Excluding the inventory effects, output grew at a modest annual rate of 1.9% in the fourth quarter.

Americans reined in shopping toward the end of the quarter, according to other Commerce Department data on retail sales, as the Omicron variant of Covid-19triggered a new wave of infections and higher prices cut into their paychecks. A separate Commerce Department report Thursday showed sales of durable goods—long-lasting items such as cars, refrigerators and bulldozers—fell in December.

“The headline 6.9% figure is probably a bit overly optimistic assessment of the underlying strength of demand,” said Andrew Hunter, chief U.S. economist at the research firm Capital Economics. “We do think it’s increasingly the case that the economy is essentially at or rapidly approaching that capacity-constrained, potential level…The speed limit is lower now than it was before the pandemic.”

The Associated Press reports on calendar 2021,

The U.S. economy grew last year at the fastest pace since Ronald Reagan’s presidency, bouncing back with resilience from 2020’s brief but devastating coronavirus recession.

The nation’s gross domestic product — its total output of goods and services — expanded 5.7% in 2021. It was the strongest calendar-year growth since a 7.2% surge in 1984 after a previous recession. The economy ended the year by growing at an unexpectedly brisk 6.9% annual pace from October through December as businesses replenished their inventories, the Commerce Department reported Thursday.

So far, so good.