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WRAPUP 1-U.S. economy likely regained steam in Q4, 2021 growth seen best in 37 years

* Fourth-quarter GDP estimated increasing at 5.5% rate

* Inventory investment seen accounting for bulk of growth

* Growth in 2021 likely the strongest since 1984

* About 260,000 people likely filed jobless claims last week

By Lucia Mutikani

WASHINGTON, Jan 27 (Reuters) - U.S. economic growth likely accelerated in the fourth quarter as businesses replenished depleted inventories to meet strong demand for goods, helping the nation to log its best performance in nearly four decades in 2021.

Growth last year was fueled by massive fiscal stimulus as well as very low interest rates. The momentum, however, appears to have faded by December amid an onslaught of COVID-19 infections, fueled by the Omicron variant, which contributed to undercutting spending as well as disrupting activity at factories and services businesses.

The Commerce Department's advance fourth-quarter gross domestic product report on Thursday would support the Federal Reserve's pivot toward raising interest rates in March, and diminish prospects of more spending by President Joe Biden's government.

Fed Chair Jerome Powell told reporters on Wednesday after a two-day policy meeting that "the economy no longer needs sustained high levels of monetary policy support," and that "it will soon be appropriate to raise" rates.

"We had a strong tailwind from inventory accumulation, and that boosted growth," said Sung Won Sohn, finance and economics professor at Loyola Marymount University in Los Angeles. "We spent so much money in the past. The Biden administration has over-stimulated the economy and the Fed supported that effort."

According to a Reuters survey of economists, GDP growth likely increased at a 5.5% annualized rate last quarter. That would be a jump from the 2.3% pace in the third quarter.

Estimates ranged from as low as a 3.4% rate to as high as a 7.0% rate. But the survey was conducted before the release on Wednesday of data showing a record goods trade deficit in December and a surge in retail inventories.

The strong retail inventory accumulation led economists, including those at JPMorgan, to raise their GDP growth estimates to as high as to a 7.5% rate.

For all of 2021, growth is estimated at 5.6%, which would be the strongest since 1984. The economy contracted 3.4% in 2020, the biggest drop in 74 years.

The sharp rebound in growth last year could offer some cheer for President Biden whose popularity is falling amid a stalled domestic economic agenda after the U.S. Congress failed to pass his signature $1.75 trillion Build Back Better legislation.