The year in brief. 2021 has been a year of economic and business recovery – a recovery tempered by the delta variant of the coronavirus but a rebound nonetheless. 

Stateside economic indicators were largely up this year, some strikingly so. As more industries opened up fully in the first half of the year, pent-up consumer demand for goods and services grew quickly, but supply could not keep up in many sectors. 

Inflation made a comeback, and analysts were divided on whether it would decline in the near term or persist at elevated levels. Cheap oil became a memory, along with cheap gas. Congress spent much of the year trying to compromise on a multi-trillion-dollar infrastructure bill and more recently started working on debt limit and budget legislation. Around the world, supply-chain issues and ongoing vaccination efforts tempered global growth.

The U.S. economy. On the whole, consumers ramped up their spending in 2021 and that boosted gross domestic product. The economy expanded at a 6.3% annualized pace in the first quarter, then 6.7% in the second; the Conference Board and the Federal Reserve Bank of Atlanta respectively see 3.5% and 1.3% annualized GDP for Q3, given the summer drag from the delta variant.

A rush of pent-up cash and stimulus payments contributed to a personal spending surge this spring – a record 12.0% jump in the second quarter. Federal spending hit a 4.2% annualized pace in Q1, also playing a role in this year’s economic resurgence.

The jobless rate continued to decline from its recent peak of 14.7% (April 2020). The Department of Labor measured 6.3% unemployment in January; by September, there was just 4.8% joblessness, and 7.7 million people out of work. Those numbers still lag behind February 2020, when there was 3.5% unemployment and 5.7 million people without jobs.

Federal government data showed consumer inflation hitting 5.4% in September. The Federal Reserve made no benchmark interest rate adjustments despite this year’s inflation pressure. At its September meeting, however, it did decide to gradually reduce its monthly purchases of securities and bonds, and plot a mid-2022 end to its current economic stimulus campaign. The CME Group’s FedWatch tool, a private-sector barometer of the probability of benchmark interest rate moves, projects the central bank making at least one rate increase by September 2022.

U.S. stock benchmarks have performed well in 2021. Coming into Halloween, the Standard & Poor’s composite index was up 21% year-to-date.

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The global economy. The International Monetary Fund estimates global GDP of 5.9% for 2021 followed by 4.9% expansion next year. Among its 2022 nation-specific growth forecasts: 5.2% for the U.S., 5.6% for China, 4.3% for the euro area.

Manufacturing slowdowns and trade issues linked to the pandemic dented China’s economy this summer. The Republic’s official Q3 GDP estimate was 4.9%, a setback from the 7.9% yearly growth pace in Q2. The same issues affected the euro area, where inflation rose to a 13-year peak in September.

Global demand for oil strengthened this year as key economies returned to full speed. An oil rally gained momentum, taking the price of WTI crude above $84 in late October (a seven-year high). The price of Brent crude, the global benchmark, concurrently topped $86 (a three-year peak). Retail gas prices rose during 2021 as well.