Economic impact: GDP will grow in 2022 but at a slower pace | Economic news

As a result, consumer savings have skyrocketed. In the second quarter of 2020, consumer savings jumped to $ 4.8 trillion, according to the Bureau of Economic Analysis. This was an increase from $ 1.2 trillion in the fourth quarter of 2019 before the pandemic began. The latest data for the third quarter of 2021 shows savings of $ 1.7 trillion.

Monetary policy has also played a stimulating role.

In addition to buying bonds, the Federal Reserve has kept the Fed funds rate target at virtually zero since March 2020.

As a result, long-term interest rates have also remained low. A 30-year mortgage rate that hovered around 3% supported the housing market.

But the stimulus should dry up in 2022.

President Joe Biden’s Build Back Better domestic economic plan was not passed until Congress adjourned in December, and it may not be approved in 2022.

The Federal Reserve has indicated it will end its bond buying program in March, and most analysts expect the Fed to raise the target federal funds rate three times this year, which would increase to 0.75% by the end of the year.

In addition to losing stimulus, the economy is facing supply chain headwinds and labor shortages that have contributed to accelerating inflation.