By Nathalie Voit

U.S. Gross Domestic Product (GDP) grew at its fastest pace in the year in Q4, closing out at a 6.9% annualized rate, the Department of Commerce said in a news release on Jan. 27.

The pace of growth was much better than forecasted; economists had projected the economy to advance just 5.5% in the last quarter, according to the New York Post.

The department said that the increase was also well above the third quarter unrevised growth rate of 2.3%. For reference, GDP growth in Q1 and Q2 was 6.3% and 6.7%, respectively.

The results brought GDP for the year to an annualized 5.7%, the strongest growth rate since 1984.

This was in contrast to a 3.4% drop in economic growth in 2020 when the country was in the thick of the COVID-19 pandemic, its worst decline since 1946, the Bureau of Economic Analysis said.

“The strength of the economy last year stood in stark contrast to the collapse in activity in early 2020, but also speaks to the success of both the public and private sector in quickly adapting to the unprecedented challenges created by the pandemic,” said chief investment officer at Plante Moran Financial Advisors Jim Baird, according to CNBC.

“That being said, potential headwinds still exist, as the global risks associated with the COVID-19 pandemic persist.”

In another sign of economic good news, jobless claims for the week ending Jan. 22 also improved, the Department of Labor said in a release on Thursday.

Initial claims fell by 30,000 from the previous week to 260,000, slightly less than the 265,000-estimate predicted by economists.

The news brought initial relief for the markets, only for stocks to close lower amid an update from the Federal Reserve indicating sooner-than-expected interest rate hikes.

“Yesterday’s FOMC decision and Powell’s presser was both positive and negative for markets, but in the end, it mostly reinforced what we know: The Fed is serious about raising rates, that’s going to continue to … keep markets volatile,” said Tom Essaye, founder of Sevens Report, according to CNBC.

The news arrives amid the ongoing spread of the Omicron variant of the coronavirus and persistent supply-chain disruptions. However, although the virus or the global supply-chain crisis won’t go away any time soon, economists expect both factors to ease heading into the year.

“It just goes to show that the U.S. economy has learned to adapt to the new variants and continues to produce,” said chief economist at Standard & Poor’s Global Ratings Beth Ann Bovino, according to Time.