The positive news comes as economic analysts continue to debate whether the U.S. is barreling toward a recession. For now, the latest numbers seem to push those fears off further.
On Thursday, the Bureau of Economic Analysis (BEA) reported that the “advance” estimate shows the nation’s real gross domestic product (GDP) increased at an annual rate of 3.3 percent in the fourth quarter of 2023 following the third quarter where real GDP increased 4.9 percent.
The news was better than expected by Wall Street and economic analysts.
The GDP estimate released is based on source data that are incomplete or subject to further revision by the source agency, BEA notes. The bureau’s “second” estimate for the fourth quarter, based on more complete data, will be released on February 28, 2024.
BEA reported that the increase in real GDP reflected increases in consumer spending (2.8 percent), exports (6.3 percent), and nonresidential and residential fixed investments (3 percent) as well as government spending at the local, state and federal levels. Federal spending rose 2.5 percent while local and state spending rose 3.7 percent.
Overall, the U.S. economy for 2023 accelerated at a 2.5 percent annualized rate compared with an increase of 1.9 percent in 2022.
As for what this means for the consumer, BEA’s report indicates that economic growth occurred as inflation has slowed. Their analysis shows disposable personal income increased $211.7 billion, or 4.2 percent, in the fourth quarter of 2023, compared with an increase of $143.5 billion, or 2.9 percent, in the third quarter. Real disposable personal income increased 2.5 percent, compared with an increase of 0.3 percent.
The personal consumption expenditures (PCE) price index increased 1.7 percent, compared with an increase of 2.6 percent. Excluding food and energy prices, the PCE price index increased 2.0 percent, the same change as the third quarter.
The positive news comes as economic analysts continue to debate whether the U.S. is barreling toward a recession. For now, the latest BEA numbers seem to push those fears off further, giving hope to consumers who have been burdened by historically high inflation and increased interest rates by the Fed aimed at stabilizing the economy.
Frank Corder
