The US Closed Out 2022 with Solid Real GDP Growth, but It Isn’t All Good News

According to the advance estimate released today by the U.S. Bureau of Economic Analysis, real GDP increased at an annualized rate of 2.9% in the fourth quarter of 2022. For the year, real GDP expanded 2.1% after posting strong growth of 5.9% in 2021. Real GDP came in slightly stronger than expected in the last quarter of 2022, but domestic demand growth was weak. And while we may see a few more interest rate hikes in the US, there are clear signs that the economy is cooling. The Federal Reserve will have to slow and eventually pause its monetary tightening—assuming inflation comes down as expected.