US economy slowed but still grew at 2.9% rate last qtr

Washington: The US economy expanded at a 2.9 per cent annual pace from October through December, ending 2022 with momentum despite the pressure of high interest rates and widespread fears of a looming recession.

Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product the broadest gauge of economic output decelerated last quarter from the 3.2 per cent annual growth rate it had posted from July through

September.

Most economists think the economy will slow further in the current quarter and slide into at least a mild recession by midyear.

The economy got a boost last quarter from resilient consumer spending and the restocking of supplies by businesses. Federal government spending also helped drive GDP.

But with higher mortgage rates undercutting residential real estate, investment in housing plummeted at a 27 per cent annual rate for a second straight quarter.

For all of 2022, GDP expanded 2.1 per cent after growing 5.9 per cent in 2021.

The economy’s expected slowdown is an intended consequence of the Federal Reserve’s aggressive series of rate hikes. The Fed’s hikes are meant to reduce growth, cool spending and crush the worst inflation bout in four decades. Last year, the Fed raised its benchmark rate seven times. It is set to do so again next week, though this time by a smaller amount.