FX.co ★ U.S. Economy Unexpectedly Grew Faster Than Previously Estimated In Q4

According to a report released by the Commerce Department on Thursday, the U.S. economy experienced unexpected growth, surpassing previous estimates in the final quarter of 2023.

The revised data revealed a surprising surge of 3.4 percent in the real gross domestic product (GDP), an improvement from the earlier reported 3.2 percent increase. This increase was contrary to economists' expectations who had predicted the GDP growth pace to remain unaltered.

The stronger growth than previously estimated is primarily attributed to upward revisions in consumer spending and non-residential fixed investment. However, these results were partially offset by a downward revision in private inventory investment.

Sam Millette, the Director of Fixed Income for the Commonwealth Financial Network, commented on the robust growth in the last quarter of 2023, attributing it to the economic resilience displayed during the initial part of 2024. "While economists still anticipate a growth slowdown in the first quarter relative to the end of last year," Millette added. "The reduction in growth is still growth. The economic backdrop is expected to continue supporting the markets."

Despite the upward revision, the GDP growth in the final quarter of 2023 demonstrates a significant deceleration from the sharp incline of 4.9 percent experienced during the third quarter. Factors attributed to this deceleration include a downturn in private inventory investment and slowing expenditures in federal government and residential fixed investment.

The reported GDP growth primarily resulted from increases in several sectors. These sectors encompass consumer spending, state and local government spending, exports, non-residential fixed investment, federal government spending, and residential fixed investment. This growth was partially offset by a decrease in private inventory investment and a rise in imports, which subtract from the GDP calculation.

In terms of inflation, the increase in consumer prices during the fourth quarter remains intact at 1.8 percent, whereas the core price increase, excluding food and energy prices, have been revised down to 2.0 percent from the initial 2.1 percent.