The US economy grew by 2.9% in the fourth quarter, more than expected

The US economy grew by 2.9% in the fourth quarter, more than expected


The US economy expanded once more throughout the fourth quarter, registering stable progress to finish 2022 at the same time as shoppers and companies battled inflation and traditionally excessive rates of interest.

Gross home product — the broadest measure of financial exercise — elevated at an annualized price of two.9% from October to December final 12 months, based on Commerce Department knowledge launched Thursday. For 2022, GDP expanded 2.1%, the report confirmed.

Last quarter’s 2.9% growth, whereas a step again from the 3.2% annualized progress seen in the third quarter, represents continued enchancment on the first half of the 12 months when GDP shrank. Those two back-to-back quarters of contraction set off alarm bells, since the declines marked a symbolic threshold for a rule-of-thumb, however unofficial, definition of a recession.

However, 2022 was a 12 months of transition as the economy continued to get well from the pandemic. Imbalances in commerce and inventories had an outsized impact on the GDP knowledge in the earlier elements of the 12 months.

But companies have since readjusted to snarls in the provide chain, and shoppers have shifted their spending away from furnishings, bikes and different items and towards companies like journey and eating out.

The sturdy financial progress registered throughout the fourth quarter was principally fueled by a “shockingly resilient client,” stated John Leer, chief economist of Morning Consult.

However, there are indicators that’s beginning to wane, he stated.

“Consumers are more and more struggling to navigate the ongoing results from the spike in costs final 12 months by drawing on credit score and financial savings,” he stated. “With client demand prone to proceed its downward trajectory, enterprise funding can be prone to gradual in the coming quarters, rising the chance of a recession this 12 months.”

Economists had been anticipating fourth-quarter GDP to develop at an annualized adjusted price of two.6%, based on Refinitiv.

Thursday’s GDP figures are the first of three official estimates to be launched by the Commerce Department for the fourth quarter. GDP knowledge is commonly revised, generally years later.

This story is growing and will likely be up to date.