Q4 GDP Revised Down Slightly to 2.7%, Economy Showing Strength in Q1

Washington, DC, February 23, 2023-Real gross domestic product (GDP) increased at an annual rate of 2.7% in Q4 2022, according to the second estimate released by the Bureau of Economic Analysis. 

In Q3, real GDP increased 3.2%.

The GDP estimate released today is based on more complete source data than were available for the advance estimate issued last month. In the advance estimate, the increase in real GDP was 2.9%. The updated estimates primarily reflected a downward revision to consumer spending that was partly offset by an upward revision to nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, were revised up.

“The U.S. economy appears to be exhibiting strength early this year, after posting solid, but slightly weaker, growth at the end of 2022, reports the Wall Street Journal.

“Entering this year, forecasters had projected the economy to cool, but recent data shows hiring and spending surged in January. Employers added 517,000 jobs and the unemployment rate fell to a 53-year low, according to the Labor Department. Retail sales jumped 3% in January, reversing two consecutive months of decline, a separate Commerce Department report showed.

Business activity, particularly in the services sector, picked up in February, according to surveys of manufacturers and service providers released Tuesday. Activity in the eurozone and U.K. also improved, a boost for the global economy.

“‘The U.S. consumer has a very steady pulse, they’re looking healthy,’ said Visa Inc. Chief Financial Officer Vasant Prabhu in an interview. ‘Under the surface there have been changes,’ he added. ‘There’s a shift from people buying home improvement projects, clothes, to a lot more travel, entertainment and restaurant spending.’

“Recent signs of strength have lessened fears that the economy will slip into recession early this year, but could also support consumer demand and keep upward pressure on prices.

“Inflation’s swift decline late last year stalled in January. The inflation rate edged down to 6.4% last month from 6.5% in December and a recent high of 9.1% in June, according to the Labor Department’s consumer-price index.”