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US Economy Continues to Beat Expectations With 3.3% Growth in Q4
January 25, 2024
The U.S. economy defied expectations once again, as the economy grew at a much quicker pace than expected in the final three months of 2023, and full-year growth accelerated from the year before, avoiding a recession that many forecasters had thought was all but inevitable.
Gross domestic product, a measure of all the goods and services produced in the nation, increased at a 3.3% annualized rate in the fourth quarter of 2023, according to Commerce Department data that is adjusted seasonally and for inflation. While down from the third quarter’s blistering 4.9% pace, economists had been anticipating a much more severe slowdown to 2% during the fourth quarter.
All told, the U.S. economy grew 3.1% over the past year, buoyed by a resilient labor market and strong consumer spending that fended off worries about a slowdown. At the beginning of the year, economists were anticipating a recession and projecting anemic growth of just 0.2% for the year. Instead, last year saw a notable economic acceleration from a 0.7% increase in 2022.
The final three months of the year gave further credence to the idea that Fed officials are on the path to achieving a soft landing. Growth was strong, employers added nearly a half-million jobs and inflation cooled to an annualized 1.7% rate, below the Fed’s 2% target.
Fed officials are on track to hold rates steady at a 23-year high at a meeting next week and have penciled in three rate cuts for 2024.
Still, there are signs that consumer spending, which accounts for roughly 70% of all economic activity, will not be able to continue at such a rapid clip. Economists, expecting consumer outlays to cool, forecast growth to ease to 1% this year.
