Washington: Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2022. In the third quarter, real GDP increased by 3.2 percent, according to the “advance” estimate released by the Bureau of Economic Analysis.
The increase in real GDP reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and exports, according to the US Department of Commerce. Imports, which are a subtraction in the calculation of GDP, decreased.
“The increase in private inventory investment was led by manufacturing (mainly petroleum and coal products as well as chemicals) as well as mining, utilities, and construction industries (led by utilities),” the US Department of Commerce said. The increase in consumer spending reflected increases in both services and goods, according to the Bureau of Economic Analysis.
“The news couldn’t have been any better,” US President Joe Biden said of Thursday’s GDP report. “We’re moving in the right direction. Now, we’ve got to protect those gains.” The US President was making a speech on PBS, an American public broadcast service.
Within services, the increase was led by health care, housing and utilities, and “other” services (notably, personal care services). Within goods, the leading contributor was motor vehicles and parts. Within federal government spending, the increase was led by non-defense spending, according to the US Department of Commerce.
“The increase in state and local government spending primarily reflected an increase in compensation of state and local government employees. Within non-residential fixed investment, an increase in intellectual property products was partially offset by a decrease in equipment,” the Bureau of Economic Analysis said in the Thursday report.
The US Commerce Department said, “Compared to the third quarter, the deceleration in real GDP in the fourth quarter primarily reflected a downturn in exports and decelerations in nonresidential fixed investment, state and local government spending, and consumer spending.”
These movements were partly offset by an upturn in private inventory investment, an acceleration in federal government spending, and a smaller decrease in residential fixed investment. Imports decreased less in the fourth quarter than in the third quarter, the US Commerce Department said.
Current-dollar GDP increased 6.5 percent at an annual rate, or USD 408.6 billion, in the fourth quarter to a level of USD 26.13 trillion. In the third quarter, GDP increased 7.7 percent, or USD 475.4 billion, the Bureau of Economic Analysis said.
Non-residential fixed investment is often considered the sector most critical to sustaining an economic expansion, as well as contributing to the longer-term growth of the economy. There are three major components of non-residential fixed investment: structures, equipment, and intellectual property products.
“The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The ‘second’ estimate for the fourth quarter, based on more complete data, will be released on February 23, 2023,” the report from the Bureau of Economic Analysis said.