• Real GDP increased at a 2.9% annual rate in Q4 2022, according to the advance estimate by the Bureau of Economic Analysis. Economic output has slowed from Q3 2022, when real GDP grew at a 3.2% annual rate.
• While recession fears have amplified heading into 2023, economic output has remained robust from a historical standpoint given the Fed’s aggressive monetary tightening measures. The US has now recovered all output lost during the pandemic, with the end of year output in 2022 registering a 2.1% annual growth rate.
• Driving the increase in output during Q4 were increases in private inventory investment, consumption, government spending, and nonresidential fixed investment. These increases were partly offset by declines in residential fixed investment and exports.
• Manufacturing, specifically petroleum/coal products, chemicals, as well as mining, utilities, and construction, led increases in private inventory investment.
• An increase in both goods and services spending contributed to the growth of consumer spending. • Growth in intellectual property products propelled nonresidential fixed investment during Q4, while falling single-family construction and industry commissions caused a drag on residential fixed investment.