GDP growth came in line with market expectations, the US economy expanded at a 6 % per annum of 2.9% in the fourth quarter, according to data released on Thursday.
The outcome, according to Wells Fargo marks the second straight quarter of GDP growth that is above trend. However, they caution that despite the economy having strong momentum going into the fourth quarter, it closed the quarter with a clear loss of steam.
The Q4 GDP data’s underlying factors not quite as outstanding.
The outcome was slightly better than the average forecast of 2.6% growth and only marks a slight slowdown from the third quarter’s 3.2% growth rate.
Real GDP growth during the economic upswing of 2010-2019 averaged 2.3% per year in order to put the GDP growth rates of the final two quarters of 2022 into context. In essence, the second half of last year saw the U.S. economy grow faster than expected.
The U.S. economy’s strong growth rates from the second half of 2022 are unlikely to be reproduced in the first quarter due to the loss of impetus at the conclusion of the fourth quarter. In fact, present projections, the real GDP will be essentially unchanged in the first quarter of 2023.
At least in the short term, the forecast for consumer spending is optimistic due to the health of the job market. However, further rate hikes by the Federal Reserve will put more strain on the economy. We anticipate the FOMC to raise rates by a net of 75 basis points over the next three policy sessions.
