WASHINGTON: The world's largest economy staged a solid recovery last year as it grew at the fastest pace since 1984, but damage from the Omicron variant of Covid-19 still looms.
Surging prices continue to pose a challenge, as inflation picked up speed in the final three months of the pandemic's second year, according to official data released Thursday.
That threatens to dampen the consumer demand that has underpinned the recovery, while supply chain snarls continue to create headaches for businesses, and for President Joe Biden's efforts to return the country to normal.
After the downturn in 2020, US GDP expanded by 5.7 percent last year, the Commerce Department said in its latest quarterly report.
Amid the rise of Omicron in the October-November period, GDP grew 6.9 percent, the data showed. While that topped expectations, economists warn the figure was inflated by businesses' attempts to rebuild depleted inventories.
"The upside surprise came largely from a surge in inventories and the details aren't as strong as the headline would suggest," said Kathy Bostjancic of Oxford Economics.
"What's more, beneath the headline GDP print, the handoff to 2022 is weak. With consumer spending retrenching in December and Omicron dampening economic activity," she said in an analysis.
Ian Shepherdson of Pantheon Macroeconomics agreed, saying the start of the year looks grim: "Our tentative Q1 GDP forecast right now is zero."
But Biden, whose signature social spending bill is stalled in Congress, cheered the report, highlighting "the fastest economic growth in nearly four decades, along with the greatest year of job growth in American history."