Sharp Spending Slowdown Lowers Fourth-Quarter U.S. GDP Ahead of Banking Crisis

The U.S. economy grew 2.6 percent in the fourth quarter, down from 3.2 percent in the third quarter, according to the Bureau of Economic Analysis (BEA). This is slightly below the second estimate of 2.7 percent.

The real GDP growth rate (inflation-adjusted) was 2.1 percent in 2022, down from 5.9 percent in 2021. Most of the expansion was driven by gains in consumer spending, private inventory investment, exports, and nonresidential fixed investment. A drop in federal government spending and residential fixed investment offset a portion of these increases.

Personal consumption expenditures (PCE) jumped 1 percent quarter over quarter, down from the 1.4 percent estimate. This was the smallest expansion since 2020. In addition, PCE prices slowed to 3.7 percent in the three months ended in December, down from 4.3 percent.

The GDP price index—a gauge of adjustments in the prices of goods and services produced in the United States and exported to other nations—slowed to 3.9 percent, down from 4.4 percent. This matched economists’ expectations.

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