US economic growth for Q4 is revised up slightly to 3.4%
Currently, the economy is believed to be growing at a slower but still decent 2.1% annual rate, according to a forecasting model issued by the Federal Reserve Bank of Atlanta
The US economy grew at a solid 3.4% annual pace from October through December, the government said on Thursday in an upgrade from its previous estimate.
The government had previously estimated that the economy grew at a 3.2% annual rate last quarter.
The Commerce Department’s revised measure of the nation’s gross domestic product - the total output of goods and services — confirmed that the economy decelerated from its sizzling 4.9% rate of expansion in the July-september quarter.
But last quarter’s growth was still a solid performance, coming in the face of higher interest rates and powered by growing consumer spending, exports and business investment in buildings and sotware. It marked the sixth straight quarter in which the economy has grown at an annual rate above 2%.
For all of 2023, the US economy - the world’s biggest - grew 2.5%, up from 1.9% in 2022. In the current January-march quarter, the economy is believed to be growing at a slower but still decent 2.1% annual rate, according to a forecasting model issued by the Federal Reserve Bank of Atlanta.
The economy’s resilience over the past two years has repeatedly defied predictions that the ever-higher borrowing rates the Federal Reserve engineered to fight inflation would lead to waves of layoffs and probably a recession. Beginning in March 2022, the Fed jacked up its benchmark rate 11 times, to a 23-year high, making borrowing much more expensive for businesses and households.
Yet the economy has kept growing, and employers have kept hiring - at a robust average of 251,000 added jobs a month last year and 265,000 a month from December through February.
At the same time, inflation has steadily cooled: Ater peaking at 9.1% in June 2022, it has dropped to 3.2%, though it remains above the Fed’s 2% target. The combination of sturdy growth and easing inflation has raised hopes that the Fed can manage to achieve a “sot landing” by fully conquering inflation without triggering a recession.
Thursday’s report was the Commerce Department’s third and final estimate of fourth-quarter GDP growth. It will release its first estimate of January-march growth on April 25.
Meanwhile, Wall Street’s main stock indexes were set to open flat on Thursday in thin trading ahead of Easter break, as investors awaited more data to gauge the Federal Reserve’s policy path on the last business day of a strong first quarter.
The three main indexes were set for strong quarterly gains, as an Ai-fueled rally and optimism around the Fed’s rate cuts helped lit Wall Street to record highs this month.
The blue-chip Dow was just 0.6% short of crossing the 40,000 level for the first time.
All three indexes ended higher in the previous session, with the Dow jumping more than 1% to post its best daily gain this year, while the S&P 500 clocked an all-time closing high.
CANADA’S GDP UP: Canada’s gross domestic product in January increased 0.6%, the fastest growth rate in a year and higher than forecasts, and the economy likely expanded 0.4% in February, data showed on Thursday.
Analysts polled by Reuters had forecast a GDP growth of 0.4% in the month. December GDP was revised to a 0.1% contraction from zero growth initially reported.
January’s rise, the fastest since the 0.7% growth in January 2023, was helped by a rebound in educational services as public sector strikes ended in Quebec, Statistics Canada said.
Thursday’s data shows the Canadian economy started 2024 strongly ater growth stalled in the second half of last year; GDP was flat or negative on a monthly basis in four out of the last six months of 2023.
The strong rebound could allow the Bank of Canada more time to assess whether inflation is slowing sufficiently without risking a severe downturn, though the bank has said it does not want to stay on hold longer than needed.
The central bank has maintained its key policy rate at a 22-year high of 5% since July, but BOC governors in March agreed that conditions for rate cuts should materialize this year if the economy evolves in line with its projections.
The bank in January forecast a growth rate of 0.5% in the first quarter, and Thursday’s data keeps the economy on a path of small growth in the first three months of 2024. The BOC will release new projections along with its rate announcement on April 10.
Growth in January was broad-based growth, with 18 of 20 sectors increasing in the month, Statscan said. The agency said noted that the real estate and rental and leasing grew for the third consecutive month, as activity at the offices of real estate agents and brokers drove the gain in January.