The U.S. economy grew at a better-than-expected 2.9 percent annual rate between October and December of last year, a slight slowdown from the previous quarter, the U.S. Commerce Department said Thursday.
Per CNBC, economists had been expecting a Q4 reading of 2.8 percent, down from Q3's 3.2 percent.
Consumer spending, which comprises over half of GDP, increased just 2.1 percent for the period — a slight decline from last quarter "but still positive," CNBC writes. Overall, Thursday's is a "mixed report," Bloomberg posits, but one that suggests the Federal Reserve might still pull off a so-called "soft landing," in which the central bank cools the economy without tipping it into a recession.
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"The mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on," said Capital Economics' Andrew Hunter, per CNBC. "We still expect the lagged impact of the surge in interest rates to push the economy into a mild recession in the first half of this year."
Comerica Bank's Bill Adams seems to agree: "Headwinds from the big jump in interest rates, consumers cutting back on discretionary spending, and weak economies overseas were big problems for the U.S. in late 2022," he told The Wall Street Journal. "I expect real GDP growth will likely turn negative in the first half of this year."
To that end, all eyes will likely be on consumers, who, as evident in Thursday's report, may be "starting to stumble," the Journal writes. But with inflation edging lower and wage growth staying strong, perhaps spending will continue unperturbed.
Otherwise, the Federal Reserve will have its first meeting of the year next week, during which officials will discuss yet another interest rate hike to further cool rising prices.
