The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP grew at a 3.3% annual rate in the fourth quarter. That growth brings the level of GDP 3.1% above the value a year ago. Those numbers are right at the historical average GDP growth over the last 70 years of 3.1%, and well above the 2% average over the last 20 years. The year 2023 ended up far better than many people expected.
The strong growth of the last two quarters brought put the Econbrowser recession indicator index all the way down to 0.9%. The current U.S. expansion has now continued for 3-1/2 years, despite hitting a rough patch in the first half of 2022.
Inventory accumulation contributed the the strong Q3 numbers. By contrast, Q4 all comes from growth in final sales. Even residential fixed investment, which we might have expected to bear the brunt of the Fed’s tightening moves, continues to make a small positive contribution to GDP growth.
The year-over-year inflation rate as measured by the implicit PCE deflator is still above where the Fed wants it. But it’s been coming down, and if we were judging just by the 6-month or 3-month rate, we’d say mission accomplished.
So far, so good.