It wasn’t as hot as the third quarter, but the final quarter of 2023 produced some pretty good economic numbers.
According to statistics released Wednesday by the U.S. Department of Commerce, the U.S. economy grew at a 3.2% annual pace from October through December, propelled by healthy consumer spending.
That level of expansion in the nation’s gross domestic product — the economy’s total output of goods and services — was down from a red-hot 4.9% from July through September.
The fourth-quarter GDP numbers were revised down from the 3.3% pace Commerce initially reported last month, according to a report from The Associated Press. U.S. growth has now topped 2% for six straight quarters, defying fears that high interest rates would tip the world’s largest economy into a recession.
The economy grew 2.5% for all of 2023, topping the 1.9% growth in 2022.
Consumer spending — about 70% of U.S. economic activity — grew at a 3% annual pace from October through December, according to the Commerce Department. Spending by state and local governments rose at a 5.4% annual rate from October through December, the fastest pace since 2019.
Wednesday’s report also showed inflation pressures continuing to lessen, the AP reported. The Federal Reserve’s favored measure of prices — the personal consumption expenditures price index — rose at a 1.8% annual rate in the fourth quarter, down from 2.6% in the third. Stripping out volatile food and energy prices, so-called core inflation was up 2.1%, accelerating slightly from a 2% increase in the third quarter.
The combination of easing inflation and sturdy hiring and GDP growth has raised hopes the Fed can pull off a rare “soft landing” — vanquishing inflation without causing a recession.
“We think growth will slow but will remain positive over coming quarters,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, told the AP. But the economy is likely to get a lift, she said, from Fed rate cuts later this year.
