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After limping out of the starting gate in 2022, the economy closed out the year with a flourish.
But economists say the strong performance will do little to head off the mild recession they’re expecting in 2023.
For all of last year, growth pulled back significantly after reaching the fastest pace in 37 years in 2021.
The nation’s gross domestic product, the value of all goods and services produced in the U.S., expanded at a seasonally adjusted annual rate of 2.9% in the fourth quarter, the Commerce Department said Thursday. Economists surveyed by Bloomberg had forecast a 2.6% rise in output.
Solid gains in consumer spending and business stockpiling more than offset another dismal quarter for housing..
Overall in 2022, the economy grew 2.1% following a 5.7% advance the prior year that was juiced by an easing pandemic.
Last year’s performance offered a split-screen narrative as the economy contracted the first two quarters before growing 3.2% in the third quarter and 2.9% the final three months of the year.
But just as the feeble showing in early 2022 almost certainly didn’t signify a recession — instead reflecting changes in volatile business stockpiling and trade – the sturdy fourth quarter numbers don’t herald a brighter outlook.
Employers were still adding a booming 539,000 jobs a month on average the first quarter of last year, compared to a solid but steadily falling 247,000 the final three months.
And in December, retail sales, industrial production and housing starts all fell more rapidly than projected following the Federal Reserve’s sharp interest rate hikes throughout the year.
“This in turn sets the stage for potentially weaker growth in the first quarter,” says Matt Colyar, an economist at Moody’s Analytics wrote in a note to clients.
That’s largely what the Fed wants.
The Fed’s campaign is aimed at bringing down annual inflation that hit a 40-year high of 9.
