Please ensure Javascript is enabled for purposes of website accessibility
US Revises Down Last Quarter's Economic Growth to 2.6% Rate
gvw_ap_news
By Associated Press
Published 1 year ago on
March 30, 2023

Share

Getting your Trinity Audio player ready...

The U.S. economy maintained its resilience from October through December despite rising interest rates, growing at a 2.6% annual pace, the government said Thursday in a slight downgrade from its previous estimate. But consumer spending, which drives most of the economy’s growth, was revised sharply down.

The government had previously estimated that the economy expanded at a 2.7% annual rate last quarter.

The rise in the gross domestic product — the economy’s total output of goods and services — for the October-December quarter was down from the 3.2% growth rate from July through September. For all of 2022, the U.S. economy expanded 2.1%, down significantly from a robust 5.9% in 2021.

The report suggested that the economy was losing momentum at the end of 2022.

Consumer spending rose at a 1% annual rate last quarter, downgraded from a 1.4% increase in the government’s previous estimate. It was the weakest quarterly gain in consumer spending since COVID-19 slammed the economy in the spring of 2020. Spending on physical goods, like appliances and furniture, which had initially surged as the economy rebounded from the pandemic recession, fell for a fourth straight quarter.

More than half of last quarter’s growth came from businesses restocking their inventories, not an indication of underlying economic strength.

Most economists say they think growth is slowing sharply in the current January-March quarter, in part because the Federal Reserve has steadily raised interest rates in its drive to curb inflation.

The resulting surge in borrowing costs has walloped the housing industry and made it more expensive for consumers and businesses to spend and invest in major purchases. As a consequence, the economy is widely expected to slide into a recession later this year.

The central bank has raised its benchmark interest rate nine times over the past year. The Fed’s policymakers are betting that they can stick a so-called soft landing — slowing growth just enough to tame inflation without tipping the world’s biggest economy into recession.

Analysts Expect a Downturn

Yet as higher loan costs spread through the economy, analysts are generally skeptical that the United States can avoid a downturn. The main point of debate is whether a recession will prove mild, with only minor damage to hiring and growth, or severe, with waves of layoffs.

The financial conditions that led to the collapse of Silicon Valley Bank on March 10 and Signature Bank two days later — the second- and third-biggest bank failures in U.S. history — are also expected to slow the economy. Banks are likely to impose stricter conditions on loans, which help fuel economic growth, to conserve cash to meet withdrawals from jittery depositors.

“The economy ended 2022 with marginally less momentum,” Oren Klachkin and Ryan Sweet of Oxford Economics wrote in a research note. ”Looking ahead, the economy will face the full brunt of tighter credit conditions and Fed policy this year, and inflation is set to stay above its historical trend.”

They added: “We expect a recession to hit in the second half of 2023.”

In the meantime, the job market remains robust and has exerted upward pressure on wages, which feed into inflation. The pace of hiring is still healthy, and the unemployment rate is near a half-century low. The confidence and spending of consumers remain relatively solid.

Thursday’s report from the Commerce Department was its third and final estimate of GDP for the fourth quarter of 2022. On April 27, the department will issue its initial estimate of growth in the current first quarter. Forecasters surveyed by the data firm FactSet have estimated that growth in the January-March quarter is decelerating to a 1.4% annual rate.

RELATED TOPICS:

DON'T MISS

The Cost to Inform California Voters? $118,000 a Page for Official Guide

DON'T MISS

Top Russian Military Officials Are Being Arrested. Why Is It Happening?

DON'T MISS

Delta Tunnel Water Project May Finally Be Nearing a Historic Decision

DON'T MISS

CA Senate Passes Hospital Seismic Compliance Bill: What’s the Impact on Local Hospitals?

DON'T MISS

Take This Memorial Day Quiz Before Warming up the Grill

DON'T MISS

Hate Wasting Money? Use These 7 Hacks to Feed Your Family for Less

DON'T MISS

NCAA and Leagues Back $2.8 Billion Settlement, Setting Stage for Current, Former Athletes to Be Paid

DON'T MISS

UC Berkeley Faces a Summer of Discontent as Gaza Protesters Remain Steadfast

DON'T MISS

Newsom Promised 1,200 Tiny Homes for Homeless Californians. How Many Are Being Used?

DON'T MISS

Fresno Unified Unveils 5-Year Literacy Plan. What Are the Expectations?

UP NEXT

UAW Files Objection to Mercedes Vote, Accuses Company of Intimidating Workers

UP NEXT

American Airlines Retreats After Blaming a 9-Year-Old for Not Seeing a Hidden Camera in a Lavatory

UP NEXT

Stock Market Today: AI Stocks Leap as Interest-Rate Worries Hold Back the Rest of Wall Street

UP NEXT

Portland Nurse Returns Home After Treating Gaza Burn Victims

UP NEXT

RNC HQ Evacuated: Blood Vials Addressed to Trump Prompt Security Alert

UP NEXT

Ex-Employee Kills 2, Injures 3 in Suburban Philadelphia Linen Company Shooting

UP NEXT

Petrochemical Company Fined $30M for 2019 Houston Explosions

UP NEXT

Biden Releases 1 Million Barrels from Northeast Reserve to Lower Gas Prices

UP NEXT

Macy’s Tops Expectations for the First Quarter as Luxury and Beauty Sales Shine

UP NEXT

UN Security Council Rejects Russia-Backed Resolution on Banning Weapons in Space

CA Senate Passes Hospital Seismic Compliance Bill: What’s the Impact on Local Hospitals?

2 days ago

Take This Memorial Day Quiz Before Warming up the Grill

2 days ago

Hate Wasting Money? Use These 7 Hacks to Feed Your Family for Less

2 days ago

NCAA and Leagues Back $2.8 Billion Settlement, Setting Stage for Current, Former Athletes to Be Paid

2 days ago

UC Berkeley Faces a Summer of Discontent as Gaza Protesters Remain Steadfast

2 days ago

Newsom Promised 1,200 Tiny Homes for Homeless Californians. How Many Are Being Used?

2 days ago

Fresno Unified Unveils 5-Year Literacy Plan. What Are the Expectations?

2 days ago

Man Sentenced to 25 Years for Teaching Bomb-Making to Person Targeting Authorities

2 days ago

UCLA Police Arrest Young Man for Alleged Felony Assault in Attack on Pro-Palestinian Encampment

2 days ago

UAW Files Objection to Mercedes Vote, Accuses Company of Intimidating Workers

2 days ago

The Cost to Inform California Voters? $118,000 a Page for Official Guide

What’s the cost of democracy in California? Sameea Kamal CalMatters If we calculate that based just on the pages informing the state’s 22...

15 hours ago

15 hours ago

The Cost to Inform California Voters? $118,000 a Page for Official Guide

15 hours ago

Top Russian Military Officials Are Being Arrested. Why Is It Happening?

15 hours ago

Delta Tunnel Water Project May Finally Be Nearing a Historic Decision

2 days ago

CA Senate Passes Hospital Seismic Compliance Bill: What’s the Impact on Local Hospitals?

2 days ago

Take This Memorial Day Quiz Before Warming up the Grill

2 days ago

Hate Wasting Money? Use These 7 Hacks to Feed Your Family for Less

2 days ago

NCAA and Leagues Back $2.8 Billion Settlement, Setting Stage for Current, Former Athletes to Be Paid

2 days ago

UC Berkeley Faces a Summer of Discontent as Gaza Protesters Remain Steadfast

MENU

CONNECT WITH US

Search

Send this to a friend