Report: US Economy Grew by 2.9% in Q4
According to the latest US Bureau of Economic Analysis (BEA) figures released on Thursday, the US economy grew at an annualized rate of 2
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Facts
- According to the latest US Bureau of Economic Analysis (BEA) figures released on Thursday, the US economy grew at an annualized rate of 2.9% in the fourth quarter of 2022, higher than growth forecasts predicted.
- This follows a 3.2% growth in Q3, with initial market reactions causing the US dollar to strengthen against rival currencies. The BEA said the increase in real GDP reflected increased government and consumer spending, increased private investments, and decreased imports.
- For the entire year of 2022, US GDP expanded by 2.1% after growing by 5.9% the year prior. Economists at Bank of America expect growth to slow to a 1.5% annual rate from January to March before receding in the following three quarters.
- Consumer spending, which comprises roughly two-thirds of domestic activity, rose 2.1% in Q4, down 0.2% from the previous quarter, while residential investment decreased by 26.7% as home sales dropped against rising mortgage rates.
- Another report also released Thursday showed that weekly jobless claims fell by 6k to 186k, the lowest since April 2022 and below the Dow Jones estimate of 205k.
- Despite the seemingly strong data, some economists predicted the recent surge in interest rates — with the Federal Reserve having increased its benchmark rate by 4.25 percentage points since March — will see a mild recession in the first half of 2023.
Sources: Forbes, Fxstreet, Associated press, Finance, CNBC and CNBC.
Narratives
- Narrative A, as provided by Abc. While the economy is expected to be headed for a slowdown this year, it's clear that economic growth in 2022 showed a marked improvement from the first half of the year. Despite the headwinds of inflation and increased interest rates, as well as being a difficult year for the housing sector, the economy continues to defy recession fears.
- Narrative B, as provided by CNN. Despite the strength of the labor market, the hiked interest rates — which will be felt in full force this year — means that the US likely won't be able to avoid a recession. Just because GDP didn't decline in Q4 doesn't mean that the economy is back on track by any means.
- Nerd narrative, as provided by Metaculus. There's a 66% chance that the US will enter a recession before 2024, according to the Metaculus prediction community.