US economy beats expectations with strong growth in fourth quarter international business news
US economy grew faster than expected fourth quarter among the strong consumer spendingAnd then rejected dire predictions of a recession in 2023 federal Reserve Interest rates were raised aggressively with an increase of 2.5% for the full year.
The Commerce Department’s Bureau of Economic Analysis said Thursday in its advance estimates of fourth-quarter gross domestic product that gross domestic product grew at a 3.3% annual rate last quarter.
The economy grew at a pace of 4.9% in the third quarter. Economists polled by Reuters had estimated that GDP would grow at a rate of 2.0%. Estimates ranged from a 0.8% rate to a 2.8% pace. The economy is growing at what Fed officials consider a non-inflationary growth rate of about 1.8%.
Last year the growth rate accelerated to 1.9% in 2022. The economy has stunned industry captains and some economists, who had called for a recession by mid-2022. Part of the economy’s resilience reflects the resilience of the labor market, marked by low layoffs and strong wage gains, which are underpinning consumer spending.
Initial claims for state unemployment benefits rose by 25,000 to a seasonally adjusted 214,000 for the week ending Jan. 20, the Labor Department said in a separate report Thursday. Economists had expected 200,000 claims in the latest week.
Near-zero interest rates, along with increased government spending during the COVID-19 pandemic, have also helped prevent a recession, allowing some corporations and households to lock in low rates.
Economists based their gloomy forecasts largely on the rapid pace at which the US central bank was raising rates to dampen demand. Most have walked back their calls for a recession and now expect slower growth this year.
The Fed is expected to keep its policy rate unchanged at the current 5.25%-5.50% range at its meeting next week.
The GDP report also showed that inflation pressures were easing in the last quarter, with the central bank widely expected to start cutting rates in the first half of this year. Starting March 2022, the Fed has raised its benchmark overnight rate by 525 basis points.
The Commerce Department’s Bureau of Economic Analysis said Thursday in its advance estimates of fourth-quarter gross domestic product that gross domestic product grew at a 3.3% annual rate last quarter.
The economy grew at a pace of 4.9% in the third quarter. Economists polled by Reuters had estimated that GDP would grow at a rate of 2.0%. Estimates ranged from a 0.8% rate to a 2.8% pace. The economy is growing at what Fed officials consider a non-inflationary growth rate of about 1.8%.
Last year the growth rate accelerated to 1.9% in 2022. The economy has stunned industry captains and some economists, who had called for a recession by mid-2022. Part of the economy’s resilience reflects the resilience of the labor market, marked by low layoffs and strong wage gains, which are underpinning consumer spending.
Initial claims for state unemployment benefits rose by 25,000 to a seasonally adjusted 214,000 for the week ending Jan. 20, the Labor Department said in a separate report Thursday. Economists had expected 200,000 claims in the latest week.
Near-zero interest rates, along with increased government spending during the COVID-19 pandemic, have also helped prevent a recession, allowing some corporations and households to lock in low rates.
Economists based their gloomy forecasts largely on the rapid pace at which the US central bank was raising rates to dampen demand. Most have walked back their calls for a recession and now expect slower growth this year.
The Fed is expected to keep its policy rate unchanged at the current 5.25%-5.50% range at its meeting next week.
The GDP report also showed that inflation pressures were easing in the last quarter, with the central bank widely expected to start cutting rates in the first half of this year. Starting March 2022, the Fed has raised its benchmark overnight rate by 525 basis points.
