In a slight downgrade from its initial estimate, the Commerce Department reported today that the U.S. economy grew at a robust 3.2% annual pace from October through December, propelled by healthy consumer spending, according to the Associated Press.
The expansion in the nation’s gross domestic product — the economy’s total output of goods and services — slipped from 4.9% from July through September. The fourth-quarter GDP numbers were revised down from the 3.3% pace Commerce initially reported last month. U.S. growth has now topped 2% for six straight quarters, defying fears that high interest rates would tip the world’s largest economy into a recession.
Far from stumbling, the economy grew 2.5% for all of 2023, topping the 1.9% growth in 2022.
Consumer spending, which accounts for about 70% of U.S. economic activity, grew at a 3% annual pace from October through December. Spending by state and local governments rose at a 5.4% annual rate from October through December, the fastest pace since 2019. Growing exports also contributed to fourth-quarter growth.
Today’s report also showed inflation pressures continuing to ease. The Federal Reserve’s favored measure of prices — the personal consumption expenditures price index — rose at a 1.8% annual rate in the fourth quarter, down from 2.6% in the third. Stripping out volatile food and energy prices, so-called “core” inflation was up 2.1%, accelerating slightly from a 2% increase in the third quarter.
