US Economy Grew Solid 3.2%
The U.S. economy expanded at a 3.2% annual rate from October to December, driven by strong consumer spending, according to a revised report from the Commerce Department. This update slightly adjusts the growth rate down from an initial 3.3% estimate.
After experiencing a vigorous 4.9% growth rate from July to September, the final quarter’s GDP growth marks a slight decrease. Nonetheless, the U.S. has maintained a growth rate above 2% for six consecutive quarters, so far surpassing concerns that high interest rates might lead the economy into a recession.
In contrast to predictions of a downturn, the economy saw a 2.5% growth throughout 2023, improving upon the 1.9% growth observed in 2022.
Consumer expenditures, which form about 70% of U.S. economic activity, increased at a 3% annual rate in the last quarter of the year. Additionally, state and local government spending surged at a 5.4% annual rate during the same period, marking the fastest increase since 2019. A rise in exports also played a significant role in the quarter’s economic growth.
The report further indicated a softening in inflation pressures. The Federal Reserve’s preferred inflation gauge — the personal consumption expenditures price index — climbed at a 1.8% annual rate in the fourth quarter, a decrease from the 2.6% rise seen in the previous quarter. Excluding the more volatile food and energy sectors, core inflation saw a slight uptick to 2.1% from a 2% rise in the third quarter.
Looking ahead to 2024, the U.S. economy is expected to continue its growth trajectory. The International Monetary Fund projects a 2.1% expansion for the U.S., which is over double its growth predictions for other major advanced economies, including Japan, Germany, the United Kingdom, France, and Italy.
Additionally, it’s an election year and we all know how those typically impact the economy…