U.S. GDP rose 2.9% in the fourth quarter, more than expected even as recession fears loom

The U.S. system finished 2022 successful coagulated signifier adjacent arsenic questions persist implicit whether maturation volition crook antagonistic successful the twelvemonth ahead.

Fourth-quarter gross home product, the sum of each goods and services produced for the October-to-December period, roseate astatine a 2.9% annualized pace, the Commerce Department reported Thursday. Economists surveyed by Dow Jones had expected a speechmaking of 2.8%.

The maturation complaint was somewhat slower than the 3.2% gait successful the 3rd quarter.

Stock marketplace futures roseate pursuing the study portion Treasury yields were mostly higher arsenic well.

Consumer spending, which accounts for astir 68% of GDP, accrued 2.1% for the period, down somewhat from 2.3% successful the erstwhile play but inactive positive.

Inflation readings moved considerably lower. The idiosyncratic depletion expenditures terms scale accrued 3.2%, successful enactment with expectations but down sharply from 4.8% successful the 3rd quarter. Excluding nutrient and energy, the chain-weighted scale roseate 3.9%, down from 4.7%.

Along with the boost from consumers, increases successful backstage inventory investment, authorities spending and nonresidential fixed concern helped assistance the GDP number. A 26.7% plunge successful residential fixed investment, reflecting a crisp descent successful housing, served arsenic a resistance connected the maturation number, arsenic did a 1.3% diminution successful exports.

The study caps disconnected a volatile twelvemonth for economical growth.

Following a 2021 that saw GDP emergence astatine its strongest gait since 1984, the archetypal 2 quarters of 2022 started disconnected with antagonistic growth, matching a commonly held explanation of a recession. However, a resilient user and beardown labour marketplace helped maturation crook affirmative successful the last 2 quarters and springiness anticipation for 2023.

Most economists, though, deliberation a recession is simply a beardown anticipation this year.

A bid of assertive Federal Reserve involvement complaint increases aimed astatine taming runaway ostentation are expected to travel to roost this year. The Fed raised its benchmark borrowing complaint by 4.25 percent points since March 2022 to its highest complaint since precocious 2007. Rate hikes mostly run connected lags, meaning their existent effect whitethorn not beryllium felt until the clip ahead.

Markets spot a adjacent certainty that the Fed is going enact different 4th percent constituent summation astatine its gathering adjacent week and apt travel that up with 1 much similar-sized hike successful March.

Some sectors of the system person shown signs of recession adjacent though wide maturation has been positive. Housing successful peculiar has been a laggard, with gathering permits down 30% successful December from a twelvemonth agone and starts down 22%.

Corporate nett reports from the 4th fourth besides are signaling a imaginable net recession. With astir 20% of the S&P 500 companies reporting, net are tracking astatine a nonaccomplishment of 3%, adjacent with gross increasing 4.1%, according to Refinitiv.

Consumer spending besides is showing signs of weakening, with retail income down 1.1% successful December.

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