In the final quarter of 2023, the US economy exceeded expectations, with real GDP growth reported at 3.4%, higher than the previously forecasted 3.2% increase. This was due to upward revisions in consumer spending and nonresidential fixed investment, which partially offset a downward revision in private inventory investment.
Despite this positive news, the fourth quarter’s GDP growth marked a notable slowdown from the 4.9% increase seen in the third quarter. This was largely due to decreases in private inventory investment and federal government spending, as well as slowdowns in residential fixed investment.
The Commerce Department’s report highlighted that GDP growth in the fourth quarter was driven by increases in consumer spending, state and local government spending, exports, nonresidential fixed investment, federal government spending, and residential fixed investment. However, these positive contributions were partly offset by a decrease in private inventory investment and an increase in imports, which subtract from the GDP calculation.
Inflation-wise, consumer prices remained unchanged at 1.8% during the fourth quarter. However, core prices (excluding food and energy) were revised downwards to 2% from 2.1%. Despite expectations of slowing growth in the first quarter of 2024