Even as recessionary worries loom, the American economy expanded at a 2.9% annualized pace in the fourth quarter of 2022, slightly above projections.
According to an early projection from the Bureau of Economic Analysis of the Commerce Department, real gross domestic product, which is the total of all final services and goods produced in the economy inflation-adjusted, grew more slowly than the 3.2% annual rate seen in the q3 of 2022. When the economy contracted at a rate of 1.6% in the first quarter of 2022 and a rate of 0.6% in the q2 of 2022, the country already satisfied the technical definition of a recession, which is two consecutive quarters of negative growth.
Private inventory investment, consumer spending, and government expenditure all increased, which contributed to the expansion. Both imports and exports fell; although the former is added to GDP estimates, the latter is subtracted.
The expansion of the manufacturing, mining, utilities, and construction industries led to an increase in private inventory investment. Due to a decline in new single-family home construction activity and a rise in mortgage rates because of the Federal Reserve monetary policy operations, residential fixed investment also fell.
Despite persistent predictions of a recession, the annualized growth of 2.9% beat experts’ estimates of 2.8%. Given the persistence of supply chain issues and inflationary pressures, the majority of economists anticipate a recession this year. An economic downturn would come after one of the worst years for the stock market in recent memory last year.
According to research by Bank of America Chief Finance Strategist Michael Hartnett, the economy will contract in the first half of the year before markets find a “far more firm footing.” However, according to Goldman Sachs Chief Economist Jan Hatzius, there are “good grounds to predict robust growth in coming quarters” according to the company’s analysts.
The Biden administration has come under fire for allegedly making economic bottlenecks worse. Since taking office, the commander in chief has halted Keystone XL Pipeline expansions and leased less federal property for oil drilling than any of his predecessors since World War II. Public records also reveal that the admin’s task group on the supply chain problem had little to no impact since Transportation Secretary Pete Buttigieg took a two-month paternity leave and Agriculture Secretary Tom Vilsack never showed up to meetings.
Even when major technology companies announced widespread layoffs, Biden “inherited an economic catastrophe and transformed it into the biggest two years of employment growth on record,” according to White House Press Secretary Karine Jean-Pierre last week. She continuously shot down worries that the cuts may portend more unemployment throughout the economy. “We can see that the President’s economic strategy is effective. And I believe that’s crucial as well,” she added. “Is there still work to be done? There is always more work to be done, as you may also hear from us.”
As annual inflation dropped from 7.1% in Nov. to 6.5% in Dec., price levels have calmed in several places. Despite the fact that price rises are still far higher than the 2% annual average observed before the lockdown-induced recession, Treasury Secretary Janet Yellen noted that inflation “has really been fairly modest, quite low for the previous six months or so.”
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