Today's Top Stories From the Breitbart News Desk

You should not feel too bad if you did not notice that the U.S. economy in the final quarter of 2021 was growing at its fastest pace in nearly forty years. Economists had estimated a 5.5 percent seasonally and inflation adjusted annualized rate of growth, and the Atlanta Fed GDPNOW gauge had only recently climbed from around five percent to 6.5 percent. On Thursday, however, the Commerce Department put its first estimate of the rate of growth for the fourth quarter at 6.9 percent.

The last time the economy grew at that pace was 1984. That growth helped Ronald Reagan win re-election in a landslide and helped the Republicans maintain control of the U.S. Senate. The University of Michigan's measure of consumer sentiment averaged 97.5 that year, up from 87.4 the year before. Inflation had increased a little from the prior year; but at 4.3 percent, it was lower than average for the preceding decade.

This time around, however, the rapid growth of the economy did not give rise to an era of good feelings. Consumer sentiment fell in October and November and only recovered a bit in December to 70.6. President Joe Biden is deeply unpopular, particularly on the subject of the economy. Gallup's poll of economic confidence stands a negative 33, all the way down to where it fell when the pandemic lockdowns first took hold.

One reason the recovery feels so bad is that much of it took place in the warehouses. The biggest factor in GDP growth in the fourth quarter was an increase in business inventories. This alone was responsible for 4.9 points of the 6.9 rate in the fourth quarter. What that indicates is that businesses produced a lot more than they sold in the fourth quarter. But since GDP is a measure of production, the inventory build counts as a positive.

So why was the inventory build so much bigger than expected? Inflation likely made a contribution. Businesses expecting prices to keep climbing have an incentive to stockpile now at a lower cost so they can sell later at the inflated prices. And we suspect that the early holiday shopping likely played a role by pumping up expectations for huge holiday sales. When these disappointed, as we predicted they would, businesses were left with packed warehouses.

Another reason the fourth quarter did not feel like a boom is the unevenness of the recovery. People are traveling less, eating out less, and not attending as many big sports events or concerts. Consumer spending grew, but much of that growth was people buying goods for their homes. As long as the services sector remains sluggish, the recovery probably will not feel all that great.

And, finally, there's that pesky inflation we keep mentioning. The personal consumption expenditure price index jumped 6.3 percent in the fourth quarter, up from 5.3 percent in the third. Real disposable income fell 5.8 percent. Personal savings declined by 22.percent from $1.72 trillion to $1.34 trillion, as Americans struggled to make ends meet when prices of just about everything rose.

So while the fourth quarter may have seen the most growth since the Reagan-era, Biden's economy is nothing at all like the Gipper's.

– Alex Marlow & John Carney
Breitbart News Network