The U.S. economy grew modestly in the fourth quarter of 2022, despite signs of weak domestic demand, according to the Bureau of Economic Analysis (BEA) Thursday.
In the fourth quarter, inflation-adjusted gross domestic product (GDP) grew by roughly 2.9%, down slightly from 3.2% in the third quarter, the BEA reported. Recession concerns among economists linger, however, amid fears that the Federal Reserve’s campaign of interest rate hikes — intended to reduce economic demand to slow inflation — will lead to reduced spending and layoffs, The Wall Street Journal reported.
“After a recession in the first half of the year, the modest GDP growth in the fourth quarter will do little to alleviate the growing recession fears among small businesses across America,” Alfredo Ortiz, president of the Job Creators Network, said in a statement to the Daily Caller News Foundation. “President Biden will use this Q4 GDP number to claim economic victory in a speech later today. Yet the war on elevated inflation and meager economic growth is far from won.”
Despite GDP contracting in the first two quarters — a well-known definition of a recession — GDP ultimately grew by 2.1% in 2022 off the back of strong consumer spending and a tight labor market, according to CNBC. GDP surged in 2021, growing 5.9% on an annual basis, thanks to government stimulus and businesses reopening after the pandemic recession, the WSJ reported.
And for 2022:
Real GDP 2.1%
-excluding pandemic years of ’20/’21 that’s slowest growth since ’16
Nominal GDP 9.2% ($2.15 trillion)
Inflation 7.1%
PCE price index 6.2%
Core PCE price index 5.0%
Real disposable income -$1,024.2 billion
Savings -$1,634.3 billion— EJ Antoni (@RealEJAntoni) January 26, 2023
Real GDP growth in the fourth quarter was driven primarily by private investment, consumer spending and government spending, the BEA reported. The largest drags on growth were residential fixed investment — which plummeted 26.7% — and declining exports.
Final sales to private domestic purchasers, a measure of consumer and business demand, grew just 0.2% in the fourth quarter, according to the BEA. The personal consumption expenditures (PCE) price index, a measure of inflation, cooled to 3.2% in the fourth quarter, down significantly from 4.8% in the third quarter.
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