U.S. Q4 GDP Growth Slightly Misses Mark at 3.2%

GDP Growth Nears Estimates

The U.S. economy’s growth in the fourth quarter of 2023 slightly underperformed against pre-report expectations, with real Gross Domestic Product (GDP) rising at an annual rate of 3.2%. This figure, as per the Bureau of Economic Analysis’ second estimate, is marginally below the anticipated 3.3% increase. The growth represents a deceleration from the 4.9% expansion seen in the third quarter.

Drivers of Economic Expansion

Key contributors to this quarter’s GDP growth included robust consumer spending, increased exports, and heightened spending by state and local governments. Additionally, both residential and nonresidential fixed investments showed positive trends. However, a notable downturn in private inventory investment partially offset these advances.

Sectoral Shifts and Revisions

The GDP’s composition this quarter showed interesting shifts. The downturn in private inventory investment and a slowdown in federal government spending, residential fixed investment, and consumer spending compared to the third quarter were significant factors in the overall GDP deceleration. The second estimate also presented upward revisions in consumer and government spending.

Economic Indicators and Personal Income

In current dollar terms, GDP increased by 4.9% or $334.5 billion in the fourth quarter, reaching a level of $27.94 trillion. Personal income trends also displayed interesting dynamics, with a notable increase in disposable personal income, although slightly revised downwards from previous estimates.

Short-Term Market Outlook

Considering the solid GDP growth rate close to expectations, along with the upward momentum in consumer spending and government expenditure, the short-term outlook for the U.S. market appears moderately bullish. The economy’s resilience, despite a slowdown in private inventory investment, suggests underlying strength. However, traders should closely monitor upcoming economic data for more definitive signals of sustained growth momentum.