US Economy Slowed but Grew 2.9% in Q4 2022, Commerce Dept. Says
Despite the pressure of rising interest rates and widespread concerns about an impending recession, the US economy grew at a 2.9% annual rate from October through December, finishing 2022 with momentum.
According to the estimate released by the Commerce Department on Thursday, the country’s gross domestic product, which is the most comprehensive indicator of economic production, slowed down in the third quarter from the 3.2% annual growth rate it had registered from July through September. The majority of economists predict that the economy will continue to slow down in the upcoming quarter and enter at least a moderate recession by midyear.
Consumer spending remained strong last quarter, and firms replenished their supply chains. Spending by the federal government also increased GDP. However, as a result of rising mortgage rates, which are undermining the residential real estate market, investment in housing fell for a second consecutive quarter at a 27% annual pace.
After increasing 5.9% in 2021, the Gdp grew 2.1% overall in 2022.
The Federal Reserve’s aggressive string of rate increases is intended to have the effect of slowing the economy down in the upcoming months. The Fed’s rate hikes are designed to curb the greatest inflation surge in four decades, slow spending, and cut growth. The Federal Reserve increased its benchmark rate seven times last year. It is expected to do so once more the following week, albeit by less.
It has come as a great shock how resilient the American labor market has been. According to federal data dating back to 1940, employers added 4.5 million employment last year, which was second only to the 6.7 million jobs added in 2021. And the 3.5% unemployment rate in the previous month matched a 53-year low.
However, it is unlikely that the good times for American workers will persist. Many individuals will cut down on their spending, and firms will probably hire fewer people as higher rates make borrowing and spending more expensive across the economy.