US Economy Grows at 2.3% in Q4, Below Expectations
The Bureau of Economic Analysis's preliminary estimate for the fourth quarter of 2023 shows GDP growth at an annualized rate of 2.3%, below the 2.6% forecast by economists. This marks a slowdown from the 3.1% growth in Q3.
Key Drivers and Offsets
Consumer and government spending fueled economic growth in Q4. However, declines in investment partially offset these gains.
Annual Growth Rate
For the full year, the US economy grew at a pace of 2.8%, slightly lower than the 2.9% in 2022 but higher than the 2.5% in 2021.
Consumer Spending
Strong consumer spending continued to drive growth, bolstered by employment and wage gains. However, the report highlights inventory drawdowns, particularly at the wholesale level, suggesting retailers stocked up ahead of potential tariffs.
Inflation and Interest Rates
The core Personal Consumption Expenditures index increased by 2.5% in Q4, in line with estimates. The data comes as investors assess the likelihood of the Federal Reserve cutting interest rates in 2025. Fed Chair Powell indicated that the economy remains strong and inflation elevated, suggesting a cautious approach.
Market Expectations
Following the Fed's decision to hold rates steady, markets now see less than a 50% chance of rate cuts before June.
Additional Information
This is breaking news, and further details will be provided as they become available.