U.S. Economy Maintaining a Steady Pace of Growth

by Wall Street Rebel - Michael London | 01/26/2023 11:11 AM
U.S. Economy Maintaining a Steady Pace of Growth

Following the announcement of the fourth quarter GDP data by the Bureau of Economic Analysis, which showed that the economy of the United States 'increased' at a rate of 2.9% toward the end of the previous year, new jobless claims decreased last week.


Despite widespread anxiety about the impending doldrums of a recession, consumers in the United States could keep spending money because of the robust state of the employment market and falling inflation rates.

According to information provided by the Commerce Department on Thursday, the gross domestic product of the United States had a growth at an annual rate of 2.9 percent in the fourth quarter of 2022. This decreased from the previous quarter's growth rate of 3.2 percent in the third quarter. The most important driver of economic activity in the United States, consumer expenditure, increased at a pace of 2.1 percent. These preliminary numbers will likely undergo at least two rounds of editing in the coming months.

A year that began with decreased economic production in the first half, which prompted fears of a recession, then returned with solid growth in the fourth quarter brought the year to a successful close. GDP increased by 1 percent throughout the course of the whole year, with comparisons made to the same period a year before. This is a significant slowdown from the 5.7 percent growth seen in 2021.

Big fluctuations in trade and inventories, traditionally the most volatile components of GDP, were the primary factors for the seesaw pattern in 2022. The wider picture, as economists put it, was far more straightforward: The recovery from the pandemic recession has slowed down from the breakneck speed it had in 2021, but it has shown remarkable resilience in the face of war in Europe, inflation across the globe, and an aggressive sequence of interest-rate rises by the Federal Reserve here in the United States.

Subscribe 100% Free to Wall Street Rebel.com and receive access to investment tools worth $17,500!

The United States of America saw an early recovery from the pandemic recession that was far more robust than the majority of the rest of the globe. The disparity worsened throughout the previous year as the conflict in Ukraine posed a risk of plunging Europe into a recession, and China's economy was restrained by regulations that strictly suppressed corruption.

Now the issue is whether or not the resilient nature of the United States can be maintained in 2023. There is widespread consensus among economists that a recession will occur, maybe later on in this year. According to a number of different metrics, inflation is still at an unacceptable level, and market participants anticipate that the Federal Reserve will continue to raise interest rates in an attempt to bring inflation under control. A battle in Congress over whether or not to raise the debt limit may generate additional unrest in financial markets or perhaps a catastrophe if legislators are unable to reach an agreement on the matter.

There are indications of strain, particularly in the industries most susceptible to the effects of increasing borrowing prices. The months of November and December saw a decrease in manufacturing output. Both the rate of construction work and the number of homes sold has drastically decreased. In recent weeks, IT corporations have made public statements announcing the termination of tens of thousands of employees.

Even the dependable engine that is consumer spending may be showing signs of sputtering: Retail sales have now declined for two consecutive months, and as Americans struggle to find ways to save money in this post-pandemic age, they are increasingly turning to credit cards for assistance.

Mr. Bryson said that "the savings rate has continued to drop down" in his report. "Credit card debt continues to climb. These tendencies, on the other hand, cannot be maintained. It would seem that consumers are still living on borrowed time."

Forecasters predicted consumer spending to be stronger in the fourth quarter than it was. Although consumer spending was robust in the fourth quarter, this indicator may suggest a further slowdown, or perhaps a fall, in the year's closing months. It is possible that many firms had less sales than expected over the Christmas season because they increased their inventory during the fourth quarter, contributing to half of the total growth that occurred during that period.

However, according to analysts, a recession will not necessarily occur this year. In most recent months, inflation has started to decrease, even if the jobless rate has stayed historically low. Because of this, the Federal Reserve may be able to increase interest rates more gradually, so lowering the probability that they may reduce economic activity by an excessive amount.

According to Wendy Edelberg, director of the Hamilton Project, an economic policy branch of the Brookings Institution, "We've seen excellent news on inflation even with the job market continuing to robust." This is even though the labor market has remained strong. "A little more patient approach to monetary policy may now be taken."

Subscribe 100% Free to Wall Street Rebel.com and receive access to investment tools worth $17,500!

The increase in interest rates has not yet had a negative impact on the economy of the United States. However, there is one area, namely housing, in which they have a discernible influence.

The housing sector, or what economists refer to as "residential fixed investment," shrank at an annual pace of 26.7 percent in the fourth quarter, which lowered total GDP growth by 1.3 percentage points. The significant decrease came after an even more significant drop in the previous quarter, followed by a somewhat less severe retreat in the previous quarter.

The market was about a fifth smaller at the end of 2022 than it had been at the beginning of the year.

The significant dip was mostly the result of a major fall in building activity last year. As a result of rising lending rates, demand was reduced, which caused builders to either postpone or cancel projects. The number of transactions also decreased as both buyers and sellers found it difficult to adapt to the continuously shifting market conditions.

The gross domestic product numbers do not consider other components of the housing market, such as prices, which have decreased significantly but have not plummeted, or rentals, which climbed fast for most of the previous year. Neither of these factors is explicitly accounted for in the GDP.


                       Economy grows with GDP rising 2.9% in Q4; first-time jobless claims down

Latest News

Stay Up to Date With The Latest
News & Updates

Join Our Newsletter


Rebel Yell Morning Market Report
Market Alerts
Offers from us
Offers from our trusted partners

Follow Us

Connect with us on social media

Facebook Twitter