U.S. economy grew by 3.3% in fourth quarter
Investing.com — The U.S. economy grew at a faster than anticipated rate in the fourth quarter, as activity remained robust even as it shows signs of slowing back down to a pre-pandemic pace.
Real gross domestic product (GDP) in the world's largest economy expanded at an annual rate of 3.3% in the three months to the end of December, decelerating from 4.9% in the third quarter, according to a key first reading from the Commerce Department. Economists had predicted a mark of 2.0%.
Consumer spending for both goods and services was the main driver of growth, according to Kathy Jones, Chief Fixed Income Strategist at Charles Schwab (NYSE:SCHW), in a post on social media platform X.
When measured against the year-ago period, GDP increased by 3.1%, adding to mounting evidence of the resilience of the U.S. economy despite historically elevated interest rates. For the year as a whole, the number rose by 2.5%, up from 1.9% in 2022. Jones called the performance «remarkable,» particularly in the face of soaring borrowing costs.
At the start of 2023, concerns were high that these tighter financial conditions — a tactic by the Federal Reserve aimed at corraling inflation back down to the central bank's 2% target — could lead to a steep downturn in growth.
However, Thursday's data indicates that America is still on track for a so-called «soft landing,» in which the Fed successfully quells price gains without sparking an economic meltdown.
Expectations for such a scenario have helped fuel a recent rally in stock markets, but Fed officials have stressed that it is not an inevitability and more data will be need to be seen before they are assured that a soft landing will actually happen.
The GDP figure could factor into this outlook,
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