US economy grew solid 3.2% in 4th quarter

WASHINGTON — The US economy grew at a robust 3.2 percent annual pace from October through December, propelled by healthy consumer spending, the Commerce Department reported Wednesday in a slight downgrade from its initial estimate.

The expansion in the nation’s gross domestic product — the economy’s total output of goods and services — slipped from a red-hot 4.9 percent from July through September. The fourthquarter GDP numbers were revised down from the 3.3 percent pace Commerce initially reported last month. US growth has now topped 2 percent for six straight quarters, defying fears that high interest rates would tip the world’s largest economy into a recession.

Far from stumbling, the economy grew 2.5 percent for all of 2023, topping the 1.9 percent growth in 2022.

Consumer spending, which accounts for about 70 percent of US economic activity, grew at a 3 percent annual pace from October through December. Spending by state and local governments rose at a 5.4 percent annual rate from October through December, fastest pace since 2019. Growing exports also contributed to fourth-quarter growth.

Wednesday’s report also showed inflation pressures continuing to ease. The Federal Reserve’s favored measure of prices — the personal consumption expenditures price index — rose at a 1.8 percent annual rate in the fourth quarter, down from 2.6 percent in the third. Stripping out volatile food and energy prices, so-called core inflation was up 2.1 percent, accelerating slightly from a 2 percent increase in the third quarter.

The United States is expected to keep churning out growth in 2024. The International Monetary Fund expects the American economy to expand 2.1 percent this year — more than twice its forecasts for growth in the major advanced economies Japan, Germany, the United Kingdom, France, and Italy.

Voters are weighing the economy’s health in advance of November’s presidential election. Many Americans are exasperated with high prices and blame President Biden. Although inflation has eased and hourly wage hikes have beaten price increases over the past year, consumer prices are still 17 percent higher.