The U.S. economy expanded at an annual rate of 6.9% in the fourth quarter of 2021, according to the final estimate of gross domestic product released by the Bureau of Economic Analysis on Wednesday.
While the report is a look in the rearview mirror, it puts a rubber stamp on what was an extraordinary recovery from the economic shocks brought about by the coronavirus. Earlier estimates had put the quarterly gain at 7%. Much of the growth was driven by businesses restocking inventories.
Earlier this month, the Fed set in motion a round of interest rate increases with a 25-basis-point hike in the federal funds rate. Market interest rates have already moved upward, with the yield on the 10-year Treasury hitting 2.416%.
The yield on the 5-year Treasury rose above that of the 30-year note briefly on Tuesday, in what is known as a yield curve inversion, often a warning sign of a recession. But it then reverted back and analysts still put the odds of a recession anytime soon at no higher than 20% to 30%.
Global supply chain disruptions, also a byproduct of the pandemic, were beginning to ease earlier this year but then picked up with the situation in Ukraine and the imposition of sanctions on Russia by many countries. Russia is a key global supplier of oil, while Ukraine is a major producer of wheat and some precious metals used in a variety of products.