The final estimate for GDP shows the US economy grew at 2.6% last quarter.
Because consumer spending kept declining, the US economy has expanded less quickly than anticipated in the fourth quarter.
According to the third and final reading for the quarter released by the Commerce Department, the broadest measure of economic activity, the inflation-adjusted gross domestic product, rose 2.6% for the final three months of 2022. According to Refinitiv, economists anticipated that GDP growth would remain constant at 2.7 percent only.
The growth was originally estimated at 2.9 percent in the first two reads of the fourth-quarter GDP by the Commerce Department, but it was later revised down to 2.7% last month. Consumer expenditure also trended downward at the same time, falling from 2.1% in the first read to 1.4% in the second revision, and finally landing at 1% in the final print, which was published Thursday morning.
The 3.2% annualised increase seen during the third quarter and was slowed down to 2.6% during the previous quarter. The slowdown in consumer spending was accompanied by declines in exports, non-residential fixed investment, and state and local government expenditure.
The PCE Price Index, which tracks prices paid for personal consumption, remained at the same level as originally reported during the quarter at 3.7%.
The United States experienced a year of change in 2022 as its economy continued to recoup from the pandemic. Early in the year, trade and inventory imbalances had a significant impact on GDP statistics, whereas consumer spending drove growth in the second half of the year.
The final estimate for GDP shows the US economy grew at 2.6% last quarter.
Everyone was out and about, spending money and travelling. and these elements fueled the economy’s pretty strong expansion last year,” said Oren Klachkin, a US economist at Oxford Economics, in a CNN interview.
According to him, those expenditures also contributed to increases in company investment.
He added that 2023 is likely to appear very different from most of last year.
He predicted that there would be “tighter lending standards, high inflation, and the [Federal Reserve’s] rate hikes will have a larger impact on the economy.” Therefore, we shouldn’t anticipate this year’s growth to be as robust as it was in 2022.
According to Oxford Economics, the first quarter of the year will see GDP increase by 2.5%, and the second half of 2023 will see a mild recession. The first-quarter GDP Now projection from the Atlanta Federal Reserve is 3.2 percent.
Expectations for the entire year have decreased. Goldman Sachs reduced its forecast for economic growth in 2023 by 0.3 percentage points to 1.2% as a result of Silicon Valley Bank’s collapse, which shook the financial sector.
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