Last quarter's growth revised downward a bit
The U.S. economy expanded at a 2.7% annual rate from October through December, a solid showing despite rising interest rates and elevated inflation, the government said Thursday in a downgrade from its initial estimate.
The government had previously estimated that the economy had grown at a 2.9% annual rate last quarter.
The Commerce Department's revised estimate of last quarter's gross domestic product — the economy's total output of goods and services — marked a deceleration from the 3.2% growth rate from July through September.
Although overall growth was solid in the fourth quarter, business spending barely rose, and consumers spent cautiously, suggesting that the economy lost some momentum at the end of 2022.
More recent data issued this month, though, shows that the economy since has rebounded.
Consumers boosted retail sales in January by the most in nearly two years, and employers added a surprisingly outsized number of jobs. The unemployment rate reached 3.4%, the lowest level since 1969.
Some of the surprisingly strong economic gains in January likely reflected much warmer-than-usual weather. Few economists expect similar outsize gains in hiring or spending in the coming months.
Most analysts think growth is slowing to a roughly 2% annual rate in the current January-March quarter.
And the Federal Reserve is expected to keep raising its benchmark interest rate over the next few months and to keep it at a peak through year's end to try to defeat still-high inflation.
Tesla undercuts average car price
It has never been this cheap to buy a Tesla.
After a hopscotch of price cuts over the past month, Tesla's Model 3 sedan now sells for $4,930 less than the average new vehicle sold in the U.S. That's the cheapest price Tesla ever has had relative to the typical U.S. vehicle, according to a new Bloomberg analysis.
It's a similar story for Tesla's more expensive Model Y sport utility vehicle, which started off the year with a staggering $13,000 price
An employee works in the battery assembly hall at the BMW Spartanburg plant in Greer, S.C. The U.S. economy from October through December grew at an annual rate of 2.7%.
drop. Even before those cuts, it was the third-bestselling SUV in the U.S. last year, after the Toyota RAV4 and the Honda CR-V. Tesla brought Model Y prices back up slightly after it sold out build slots through at least the first quarter in the U.S.
Tesla's first price cuts, on Jan. 12, were steep and sudden, and they continue to reverberate. Ford Motor Co. quickly followed by
slashing prices of its electric Mustang Mach-E. Lucid Group Inc. offered $7,500 discounts, and Rivian Automotive announced more layoffs.
General Motors Co. is slated to launch electric versions of its Chevrolet Blazer and Equinox SUVs later this year, right in the thick of America's first EV price war. As Morgan Stanley analyst Adam Jonas put it, “the EV market may be
entering the `shake-out' phase.”
At the same time, prices of gasoline-fueled cars have moved in the opposite direction. The average cost of a new vehicle has risen more than $10,000 since the start of the pandemic, to $47,920 in January. This has been driven by a shortage of computer chips, raw material inflation and deliberate decisions by manufacturers to keep inventories low and prices high while they spend heavily on developing electric cars.
Millennials drive up demand for Twinkies
Hostess Brands, the company behind iconic Twinkies snack cakes, says demand from millennials is helping to propel U.S. growth.
“We're focused on the domestic market, and there's a lot of opportunity there,” Chief Executive Officer Andrew Callahan said in a Bloomberg Television interview Thursday. “We're talking to consumers. We're attracting new millennials. We're keeping up with our investment quality.”
Hostess generates almost 99% of its revenue from the U.S. and the rest from Canada. The Lenexa, Kansasbased company last week reported earnings that beat Wall Street estimates. Newer products such as Bouncers mini snack cakes are popular with millennial parents who pack lunches, Hostess said on a Tuesday earnings call.