U.S. economic growth slowed to a 2.9% annual rate in the fourth quarter of 2022, bringing an end to a year marked by high inflation.
In the third quarter of last year, real GDP increased 3.2%, the U.S. Commerce Department said Thursday.
“The deceleration in real GDP in the fourth quarter primarily reflected a downturn in exports and decelerations in nonresidential fixed investment, state and local government spending and consumer spending,” according to the Commerce Department report. “These movements were partly offset by an upturn in private inventory investment, an acceleration in federal government spending, and a smaller decrease in residential fixed investment.”
Measured from the fourth quarter of 2021 to the fourth quarter of 2022, real GDP increased 1% during the period, compared with an increase of 5.7% from the fourth quarter of 2020 to the fourth quarter of 2021.
“Real GDP rose 2.9% … but, the two components of real GDP that usually have the most to say about future growth are business investment in equipment and home building, which declined, at 3.7% and 26.7% annual rates, respectively,” First Trust Portfolios LP Chief Economist Brian Wesbury wrote in a tweet.
Justin Wolfers, a professor of public policy and economics at the University of Michigan, said the latest Commerce Department figures confirm that there wasn’t a recession last year.
“There’s a lot to be said about these latest GDP data, but I think the thing it underscores is that it’s now official: There was no recession in 2022,” he tweeted Thursday. “All that talk, all that energy, all that bluster, was nonsense all along.”
The slowing GDP comes amid heightened recession concerns.
The latest survey from the National Association for Business Economics, released this week, found that more than half of respondents put the possibility of a recession over the next year at 50% or higher.
“The results … indicate widespread concern about entering a recession this year,” NABE President Julia Coronado said. “For the first time since 2020, more respondents expect falling rather than increased employment at their firms in the next three months.”
Respondents reported higher interest rates and costs as the biggest downside risks to their outlooks. Sixty-three percent of respondents reported rising wages over the past three months. That was unchanged from the October 2022 survey. They further reported that sales growth in the fourth quarter of 2022 was relatively unchanged from the previous quarter.