End-of-year GDP Report

January 26, 2023

It will go in the history books as an OK year.

Chief economist for Wells Fargo, Jay Bryson, referring to Thursday’s end-of-year GDP report. The U.S. economy grew 2.9% in the fourth quarter – slightly higher than many economists expected.

Gross Domestic Product (GDP): The sum of all goods and services produced in the U.S. economy (i.e., how much the economy grew or shrank in recent months). The economy shrank in the first two quarters of 2022 and slightly grew in the third and fourth, concluding “a year of economic cool-down.”

Why It Matters: The fourth-quarter data (Oct. – Dec.) completes an economic picture for 2022. Overall, the economy grew at an annual rate of 1% compared to 5.7% in 2021. It shows that recovery from the pandemic has cooled but still faces hurdles amidst the war in Ukraine, high global inflation, and continued interest-rate increases by the Federal Reserve. Worth Noting: This is the first of three readings for the same data point and it is “subject to further revision” by the Bureau of Economic Analysis.

Headed Towards a Recession? Depends on who you ask. Many economists continue to debate the likelihood of a recession this year as the economy shows some signs of resilience, such as ongoing consumer spending, while high interest-rates intended to curb inflation could “trigger broad spending cutbacks and job losses.” The Wall Street Journal explains, “The trajectory of the economy largely depends on how consumers fare in the coming months.”

GDP Report Shows Economic Growth Cooled Slightly in Fourth Quarter (The Wall Street Journal)

G.D.P. Report: U.S. Economy Records Solid Growth (The New York Times)

by Jenna Lee,