In The Fourth Quarter, US GDP Increased By 2.7%, A Smaller Increase Than Previously Reported

According to a downward revision to consumer spending, the Commerce Department said on Thursday that the US economy expanded somewhat less than initially estimated in the final three months of last year.

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In comparison to the initial estimate of 2.9 percent growth, annualized GDP growth for the months of October to December was lower at 2.7 percent.

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The Commerce Department stated in a statement that "the updated estimates principally reflected a downward revision to consumer expenditure that was partially offset by an upward revision to nonresidential fixed investment."

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The projected rate of GDP growth for 2022 stays at 2.1 percent.

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The change comes as the Federal Reserve makes aggressive attempts to reduce inflation and chill demand, which have a negative impact on consumer spending and the largest economy in the world.

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Yet, the labor market and consumer spending have mostly held up, raising optimism for an economic "soft landing" in which inflation declines without a significant downturn.

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According to the Commerce Department, the fourth quarter of last year saw an increase in consumer spending and private inventory investment, which was driven by manufacturing.

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Yet, there was a change in consumer spending from spending on commodities to services.

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The government stated that the increases were also partially offset by declines in exports and residential fixed investment.

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According to the Commerce Department, the slowdown in consumer spending and a decline in exports were the main causes of the GDP's slowdown in the last few months of the previous year.

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GDP grew 3.2% in the third quarter of 2022.

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Economists anticipate a slower rate of expansion in the early months of 2023, which will be good news for the Fed.

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According to Rubeela Farooqi, senior US economist at High Frequency Economics, "even as growth slows, a focus on decreasing rising inflation means rates will move up further and remain higher for longer."