The U.S. economy grew at a solid 3.4% annualized pace from October to December last year, the U.S. government announced on Thursday, marking an improvement from its previous estimate. The government had previously estimated that the economy expanded at a rate of 3.2% in the last quarter of 2023.
A revised measure of gross domestic product — the country's total output of goods and services — confirmed that the economy slowed from its red-hot 4.9% expansion rate in the July-September quarter, the Commerce Department said.
However, last quarter's growth represented solid performance, driven by higher interest rates and consumer spending, exports and business investment in buildings and software. It was the sixth consecutive quarter the economy grew at an annualized rate of more than 2%.
For all of 2023, the US economy – the world's largest – is projected to grow 2.5%, up from 1.9% in 2022. In the current January-March quarter, the economy is expected to improve at a slower but still decent annualized rate of 2.1%. . According to a forecast model provided by the Federal Reserve Bank of Atlanta.
Thursday's GDP report also indicated that inflationary pressures continued to ease. The Federal Reserve's preferred price gauge — known as the personal consumption expenditures price index — rose 1.8% at an annual rate in the fourth quarter. That's down from 2.6% in the third quarter and the smallest increase since 2020, when COVID-19 triggered a recession and pushed prices down.
Excluding volatile food and energy prices, so-called core inflation rose unchanged from the third quarter from October to December at 2%.
