DAVENPORT, Iowa — At the end of 2021, the U.S. economy grew at an annualized rate of 6.9% - its best quarterly performance since 2020. Now the big question is - will that growth continue in 2022?
Good Morning Quad Cities Financial Expert Mark Grywacheski with the Quad Cities Investment Group joined us on GMQC on Monday to discuss just that. He said the economy has seen a very quick recovery since the height of business closures back in March 2020 due to the COVID-19 pandemic.
"By the time the economy started to reopen in various phases, we had this pent-up consumer demand," Grywacheski explained. "People could finally go out and spend their money. Then you add in the impact of vaccines and $5 trillion in government stimulus money. All of that has fueled a very strong economic recovery."
He said we're still seeing strong consumer spending in the first quarter of 2022, but the economic scene is changing with inflation hitting a 40-year high and interest rate hikes on the horizon:
"Anytime you start raising interest rates, it acts as a weight on economic growth," he explained. "To get this 40-year high level of inflation under control, if the Federal Reserve has to raise interest rates 4/5/6 times this year, I’m worried that economic growth forecasts could be downgraded."
Right now, Grywacheski said it's been downgraded from about a 4% growth rate to around 2.3-2.7%, which is still slightly above the historical average of about 2.2%.
To see/hear more of our conversation, click the video above.
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