The U.S. economy grew at a solid pace of 3.4% annually from October through December, as reported by the government on Thursday. This was an upgrade from the previous estimate of 3.2% growth in the last quarter of the year. The revised measure of gross domestic product by the Commerce Department confirmed a slight deceleration from the previous quarter’s rapid 4.9% expansion rate.
Despite facing higher interest rates, the economy’s growth was driven by increasing consumer spending, exports, and business investments in various sectors. This marks the sixth consecutive quarter where the economy has grown at an annual rate above 2%. For the entire year of 2023, the U.S. economy recorded a growth rate of 2.5%, which was an improvement from the 1.9% growth in 2022.
In the current January-March quarter, the economy is expected to grow at a slower but still respectable annual rate of 2.1%, according to the Federal Reserve Bank of Atlanta’s forecasting model. Despite multiple interest rate hikes by the Federal Reserve to combat inflation, the economy has continued to grow, with consistent job growth and a gradual decline in inflation rates.
The combination of steady economic growth and diminishing inflation has raised hopes that the Federal Reserve may achieve a “soft landing” by curbing inflation without causing a recession. The report released on Thursday was the Commerce Department’s final estimate of fourth-quarter GDP growth, with the first estimate of January-March growth set to be released on April 25th.