He growth of the American economy exceeded projections in the fourth quarter, as the cooling of the inflation boosted consumer spendingcapping a surprisingly strong year that defied recession predictions.
The gross domestic product (GDP) grew at an annualized rate of 3.3 percent, according to the Government’s preliminary estimate published this Thursday. In all of 2023, the economy expanded 2.5 percent.
The economy’s main growth driver — personal spending — grew at a rate of 2.8 percent. Business investment and housing also helped drive the bigger-than-expected advance in the final quarter of the year.
A closely watched measure of core inflation rose 2 percent, according to the Bureau of Economic Analysis report.
The figures close a year in which the economy showed surprising resistancedefying the expectations of many Wall Street economists that the country was about to fall into recession.
Despite the burden on households and businesses from the Federal Reserve’s interest rate increases, consumer spending was continually boosted by durable job growth and slowing inflation. . .
Driven by a higher than expected spending in the Christmas seasonfourth-quarter figures suggest the economy has gained some momentum in the new year, fueling expectations that the expansion is on a more solid footing.
The evolution of inflation and the response of the Federal Reserve (Fed) will be decisive in defining the direction of the economy this year. The longer interest rates remain restrictive, the more economists anticipate that borrowing costs will affect demand as well as hiring and expansion plans.
Central bankers next week are expected to keep rates at the highest level in two decades, although they have already begun discussing easing monetary policy.
