The latest GDP report indicates that economic growth remained solid at the end of last year as the strong job market and cooling inflation allowed Americans to keep spending despite fears of a recession.
U.S. gross domestic product, adjusted for inflation, increased at an annual rate of 2.9 percent in the fourth quarter of 2022, the Commerce Department said Thursday. That was down slightly from a 3.2 percent growth rate in the third quarter. Consumer spending, the bedrock of the U.S. economy, grew at a 2.1 percent rate. The data is preliminary and will be revised at least twice in coming months.
“The economy continued to motor on,” said Michael Gapen, chief U.S. economist for Bank of America. “There’s more momentum in the economy at year-end than we thought, and a lot of that is from households.”
The healthy fourth-quarter growth capped a year in which economic output contracted in the first half, prompting talk of a recession, then rebounded. Over the year as a whole, as measured from the fourth quarter a year earlier, G.D.P. grew 1 percent, down sharply from 5.7 percent growth in 2021.
The seesaw pattern in 2022 was driven by big swings in trade and inventories, historically the most volatile components of G.D.P. The bigger picture, economists said, was simpler: The recovery from the pandemic recession has cooled from the frenetic pace of 2021, but has remained resilient in the face of war in Europe, inflation around the world and an aggressive series of interest-rate increases by the Federal Reserve at home.
“2020 was the pandemic. 2021 was the bounce back from the pandemic. 2022 was a transition year,” said Jay Bryson, chief economist for Wells Fargo. “It will go in the history books as an OK year.”