The U.S. economy unexpectedly grew by more than previously estimated in the fourth quarter of 2023, the Commerce Department revealed in a report released on Thursday.
Revised data showed real gross domestic product surged by 3.4 percent in the fourth quarter compared to the previously reported 3.2 percent jump. Economists had expected the pace of GDP growth to be unrevised.
The Commerce Department said the stronger than previously estimated growth primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment.
“While the strong growth to end 2023 was impressive on its own, it also helps explain the economic resilience that we’ve seen throughout the first quarter, as the positive momentum from the end of last year has carried over into 2024,” said Sam Millette, Director of Fixed Income for Commonwealth Financial Network.
He added, “While economists still expect to see slowing growth in the first quarter compared to the end of last year, slowing growth is still growth and the economic backdrop is expected to remain supportive for markets.”
Despite the upward revision, the GDP growth in the fourth quarter still reflects a notable slowdown from the 4.9 percent spike seen in the third quarter.
The deceleration primarily reflected a downturn in private inventory investment and slowdowns in federal government spending and residential fixed investment.
Meanwhile, the report said the GDP growth in the fourth quarter primarily reflected increases in consumer spending, state and local government spending, exports, nonresidential fixed investment, federal government spending, and residential fixed investment.
The positive contributions were partly offset by a decrease in private inventory investment and an increase in imports, which are a subtraction in the calculation of GDP.
On the inflation front, the increase in consumer prices in the fourth quarter was unrevised at 1.8 percent, while the increase in core prices, which exclude food and energy prices, was downwardly revised to 2.0 percent from 2.1 percent.
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