US Economy : The US economy’s performance in the fourth quarter surpassed expectations, driven by subdued inflation, which boosted consumer spending and concluded a surprisingly robust year, defying predictions of a recession.
The preliminary government estimate revealed a 3.3% annualized growth in Gross Domestic Product (GDP) for the fourth quarter. The overall expansion for 2023 stood at 2.5%. Key contributors to this growth included a 2.8% increase in personal spending, while business investment and housing also played significant roles in the larger-than-anticipated advancement.
US Economy Surges in Fourth Quarter
A critical gauge of (US Economy) underlying inflation, in line with the Federal Reserve’s target, saw a 2% rise for the second consecutive quarter, as per the Bureau of Economic Analysis report. Stock futures experienced an uptick, and Treasury yields decreased as traders concentrated on the inflation figures, increasing the likelihood of a March rate cut.
The data marks the end of a resilient year for the economy, defying expectations of a recession from many Wall Street economists. Despite challenges posed by four interest-rate hikes by the Federal Reserve, consumer spending remained strong, supported by consistent job growth and decreasing inflation.
The fourth-quarter results, buoyed by better-than-expected holiday spending, suggest that the economy carried momentum into the new year, raising expectations of a more robust expansion. The trajectory of inflation and the Federal Reserve’s response will play a pivotal role in determining the economy’s direction in the coming year.
In contrast, the European Central Bank (ECB) opted to maintain its record-high rates on Thursday, emphasizing its commitment to combating inflation (US Economy) and giving no indication that policymakers are considering easing measures. The ECB concluded its rapid rate-hiking cycle in September but has been firm in asserting that discussing a policy reversal would be premature.
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