In the final quarter of 2023, the US economy experienced unexpected growth, according to a report released by the Commerce Department. The data showed that real gross domestic product (GDP) increased by 3.4 percent, higher than the previously reported 3.2 percent rate. Economists had predicted no change in GDP growth, but this was not the case as the stronger-than-expected growth was attributed to revisions in consumer spending and nonresidential fixed investment. However, private inventory investment saw a slight decrease.
Sam Millette, Director of Fixed Income for Commonwealth Financial Network, stated that the robust growth at the end of 2023 has carried over into 2024, providing economic resilience. Despite an upward revision in GDP growth rates, there was a slowdown from the previous quarter’s 4.9 percent jump due to several factors such as reduced federal government spending and sluggish residential fixed investment.
On a positive note, consumer spending saw an increase along with state and local government spending, exports, nonresidential fixed investment, federal government spending and residential fixed investment. However, these gains were partially offset by a decrease in private inventory investment and an increase in imports which subtracted from GDP calculation.
In terms of inflation, consumer prices remained unchanged at a 1.8 percent increase in the fourth quarter while core prices (excluding food and energy) saw a slight downward revision to a 2.0 percent increase. Despite expectations of slower growth in the first quarter of 2024, the economic outlook remained favorable for markets.
Overall, despite some downside risks such as inflationary pressures and geopolitical tensions that could negatively impact global trade flows and supply chains
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