US economy sees strong growth at the end of 2021

The economy has cooled in recent weeks due to the Omicron version of the pandemic, which emerged in South Africa in late November and spread to the US and around the world. The edition has sent many sick workers home; temporarily closed some schools, universities and businesses; and prompted some cities to restrict personal shopping to those who have been masked and vaccinated.

Chief executive officer Jonathan Silver said data from consumer spending tracking firm Affinity Solutions shows that overall, consumers continued to spend in the first half of January. Spending growth has slowed, but it has not fallen, a sign that consumers are not too scared and should continue to increase production, he said.

Mr. Silver said, “They are not seeing Omicron as a threat. They are willing to spend. There is a perception that they have disposable income because of high employment and accumulated savings over the pandemic. I think people It’s getting a little more comfortable and we expect that to continue.”

Although economists and health officials expect such effects to subside in the coming months, the disease is now stalling economic recovery.

Strum Contracting Company, a Baltimore-based welding and fabrication manufacturing company, was working to improve a port at Sparrow Point, south of Baltimore, as of earlier this month. The company’s CEO Tira Strum said the company then closed the project for a week due to the outbreak of Covid-19 cases among workers. He said the shutdown caused a loss of about $18,000 to the company.

“When you have to quarantine the entire crew, it puts you behind schedule,” Ms Strum said, adding that the company has also struggled to fill openings for welders and a project manager. “Because we do a lot of state and federal work, we still have tough deadlines. So Covid or not, we still have to meet those deadlines.”

The struggles of strum contracting represent a wider problem in the economy: demand for companies is strong, but supply—whether of goods or workers—is tight. Those shortfalls are driving up inflation.

The Federal Reserve indicated on Wednesday that it would go ahead with raising interest rates starting in March this year to rein in inflation, while expecting the economy to grow faster.

“The path of the economy depends on the course of the virus,” the central bank said in a written statement. “Progress on vaccination and easing of supply constraints is expected to support continued gains in economic activity and employment as well. Reduction in inflation. Risks to the economic outlook, including new forms of the virus, remain.”

Forecasting firm IHS Markit estimates that production will grow at a 1.5% annual rate from January to March. This will be the weakest quarter of growth since the recovery began in mid-2020. The company gave an early glimpse at economic growth this week when it reported that its index of US services and manufacturing activity – which covers most of the economic activity – slowed sharply.

Economists say production is expected to pick up later this year as omicrons fade, supply problems ease and workers return to work. Perhaps the biggest factor driving growth is consumer spending, which showed signs of slowing in December. Still, home buying continues, economists say, as more and more people secure jobs and their savings—boosted by federal stimulus efforts—stay well above pre-pandemic levels.