U.S. Economic Growth Far Exceeds Estimates In Q4

(RTTNews) - The Commerce Department released a report on Thursday showing the U.S. economy grew by much more than expected in the fourth quarter of 2023.

The report said gross domestic product shot up by 3.3 percent in the fourth quarter after surging by 4.9 percent in the third quarter. Economists had expected GDP to jump by 2.0 percent.

The stronger than expected GDP growth partly reflected a continued surge in consumer spending, which shot up by 2.8 percent in the fourth quarter after spiking by 3.1 percent in the third quarter.

The Commerce Department said the continued consumer spending growth reflected increases in spending on both services and goods.

Within services, the leading contributors were food services and accommodations as well as health care, while pharmaceutical products and computer software helped lead the increase in spending on goods.

Increases in exports, government spending, non-residential fixed investment, private inventory investment and residential fixed investment also contributed to the jump in GDP.

"Fourth-quarter 2023 GDP growth beat all expectations thanks to strong consumer and government spending plus a positive contribution from net trade," said ING Chief International Economist James Knightley.

Meanwhile, the report said the slowdown in the pace of GDP growth compared to the previous quarter reflected slowdowns in private inventory investment, federal government spending, residential fixed investment, and consumer spending.

On the inflation front, the Commerce Department said the personal consumption expenditures price index increased 1.7 percent in the fourth quarter compared with a 2.6 percent jump in the third quarter.

Excluding food and energy prices, the PCE price index increased 2.0 percent in the fourth quarter, the same as in the third quarter.

"First-quarter GDP growth is expected to be weaker based on business surveys, but the Fed is close to declaring victory on inflation with the second consecutive 2% quarterly core inflation reading," said Knightley.