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The US economy has surpassed predictions, expanding by a remarkable 3.3% in the fourth quarter. This growth was driven by improvements in government expenditure, business investment, exports, and consumer spending, exceeding the experts’ anticipated growth rate of 2.0%. The United States Department of Commerce released the first estimate of the Gross Domestic Product (GDP) for the fourth quarter of 2023, revealing a significant expansion of 3.3% compared to the previous quarter. Consequently, the US economy is now expected to have grown by 2.5% in 2023, surpassing the initial projection of 1.9%.
The LSEG consensus, a collection of experts’ opinions, had predicted a growth rate of 2.0%. The latest data proves that the US economy has outpaced these expectations, showcasing its resilience and strength. Notably, the first, second, and third quarters of the year witnessed promising growth rates of 2.0%, 2.1%, and 4.9% respectively. The government’s increased expenditure at the federal, state, and regional levels, combined with robust export performance, contributed to the substantial GDP growth observed in the fourth quarter.
As a result of these positive developments, the US economy reached a total GDP of $27.94 trillion, reflecting a significant increase of 4.8% or $328.7 billion. In the preceding third quarter, the GDP expanded by a noteworthy 8.3%, equivalent to $547.1 billion. These figures demonstrate the consistent growth trajectory of the US economy.
In terms of the consumer price index (PCE), there was a 6.5% increase in 2022, followed by an estimated 3.7% rise last year. However, when energy and food costs were excluded, the core PCE only saw a 4.1% increase instead of the projected 5.2%. This indicates that inflationary pressures were not as severe as initially anticipated.
The fourth quarter’s personal income figures reveal positive trends among American individuals. Gains in compensation, personal income from assets, and homeowner income contributed to a $224.8 billion increase compared to the previous quarter’s $196.2 billion rise. Furthermore, disposable personal income experienced growth, climbing by $143.5 billion or 2.9% more, following a 4.2% gain or $211.7 billion in the third quarter.
Despite these positive developments, the amount saved by individuals in the fourth quarter decreased slightly to $818.9 billion compared to $851.2 billion in the third quarter. As a percentage of disposable income, the personal savings rate dipped to 4.0% from 4.2% previously. This reduction could be attributed to increased consumer spending and renewed economic activity.
In conclusion, the US economy has surpassed expectations by expanding at a rate of 3.3% in the fourth quarter. The growth in government spending, business investments, exports, and consumer spending has fuelled this remarkable performance. As a result, the GDP for the year is now projected to have grown by 2.5%, exceeding the initial forecast of 1.9%. Despite some inflationary pressures, the core consumer price index remained relatively stable. The personal income of Americans experienced significant growth, contributing to a positive outlook for the economy. However, the slight decline in personal savings suggests increased spending and economic activity. Overall, these figures demonstrate the resilience and strength of the US economy in the face of various challenges.
