US economy grew 3.2% in the fourth quarter of 2023

WASHINGTON, DC — This Wednesday, the Department of Commerce of USA reported that that country’s economy grew at an annual rate of 3.2% from October to December, driven by consumer spending.

The expansion of Gross domestic product —the total goods and services produced by a nation—decreased compared to the 4.9% recorded between July and September. It is also a slight decrease compared to the 3.3% that the Department of Commerce initially reported last month.

US GDP has grown more than 2% in six consecutive quarters, despite fears that interest rate increases would push the economy into a recession.

Very far from that, the US economy grew 2.5% for all of 2023, exceeding 1.9% for all of 2022.

Consumer spending, which comprises 70% of all U.S. economic activity, grew at an annual rate of 3% from October to December.

Higher exports and higher spending by state and local governments also contributed to growth in the fourth quarter.

Forecasts are that the US economy will continue to grow in 2024. The International Monetary Fund estimates that it will grow by 2.1%, more than double what it predicts for Japan, Germany, the United Kingdom, France and Italy.

Election campaign in the US

The economy is one of the main topics in the American election campaign prior to the November elections. Many Americans feel exasperated by high prices and blame the President Joe Biden. Despite inflation has eased and hourly wages have increased more than prices in the last year, consumer prices are still 17% above where they were three years ago.

Responding to inflation, the Federal Reserve increased its benchmark interest rate 11 times between March 2022 and July 2023, leaving it at its highest level in more than two decades.

Higher borrowing costs have controlled the inflationary spike.

Last month, consumer prices were just 3.1% higher than where they were in January 2023, down from a peak of 9.1% in June 2022 and closer to the Fed’s target of 2%.

Wednesday’s report also shows that inflationary pressures are easing. The Fed’s preferred statistic for measuring prices — the consumer price and personal spending index — rose 1.8% in the fourth quarter, down from 2.6% in the third. If the most volatile items of food and energy are excluded, the so-called core inflation increased by 2.1%, a slight increase compared to the 2% in the third period.

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