U.S. GDP Rose 2.9% In The Fourth Quarter, More Than Expected Even As Recession Fears Loom
The U.S. economy finished 2022 in solid shape even as questions persist over whether growth will turn negative in the year ahead. Fourth-quarter gross domestic product, the sum of all goods and services produced for the October-to-December period, rose at a 2.9% annualized pace, the Commerce Department reported January 26. Economists surveyed by Dow Jones had expected a reading of 2.8%. The growth rate was slightly slower than the 3.2% pace in the third quarter.
Consumer spending, which accounts for about 68% of GDP, increased 2.1% for the period, down slightly from 2.3% in the previous period but still positive. Inflation readings moved considerably lower to end the year after hitting 41-year highs in the summer. The personal consumption expenditures price index increased 3.2%, in line with expectations but down sharply from 4.8% in the third quarter. Excluding food and energy, the chain-weighted index rose 3.9%, down from 4.7%. While the inflation numbers indicated price increases are receding, they remain well above the Federal Reserve’s 2% target.
Along with the boost from consumers, increases in private inventory investment, government spending and nonresidential fixed investment helped lift the GDP number. A 26.7% plunge inresidential fixed investment, reflecting a sharp slide in housing, served as a drag on the growth number, as did a 1.3% decline in exports. The housing drop subtracted about 1.3 percentage points from the headline GDP number. Federal government spending rose 6.2%, due largely to an 11.2% surge on nondefense outlays, while state and local expenditures were up 2.3%. Government spending in total added 0.64 percentage points to GDP.
Source: CNBC, 01.26.2023
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