The US economy expanded at an annual rate of 2.7% from October to December, a strong result 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 grew at an annual rate of 2.9% last quarter.
The Commerce Department’s revised fourth-quarter estimate of Gross Domestic Product (GDP), the economy’s total output of goods and services, marked a growth rate slowdown to 3.2% from July to September.
Thursday’s report revised down the government’s estimate for consumer spending growth in the October-December quarter to 1.4% from a rate of 2.1%. That was the weakest showing since the first quarter of last year.
Business spending also slowed in the fourth quarter, suggesting that the economy lost momentum by the end of 2022.
However, more recent data shows that the economy has since recovered. Consumers drove retail sales in January to the most in nearly two years, and employers added a surprisingly large 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 outsized gains in hiring or spending in the coming months. Most analysts believe growth is slowing to an annual rate of about 2% in the current January-March quarter.
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