US Q4 Growth Rate at 3.3%... 2.5% Annual Growth in 2023

The U.S. economy's growth rate in the fourth quarter of last year exceeded market expectations, driven by strong consumer spending.

According to the U.S. Department of Commerce on the 25th (local time), the preliminary estimate of the fourth-quarter GDP growth rate was 3.3% annualized. Although this represents a slowdown compared to the third quarter of last year (4.9%), it is significantly higher than the market forecast of 2%.

This robust growth rate contrasts with earlier projections that anticipated an inevitable economic slowdown in the fourth quarter due to the Federal Reserve's aggressive tightening measures. This was supported by solid consumer spending, which accounts for about 70% of GDP. U.S. personal consumption expenditures increased by 2.8% in the fourth quarter of last year.

The annual growth rate for 2023 was recorded at 2.5%.

Accordingly, as the U.S. economy maintains a solid level, voices advocating for maintaining high interest rates for the time being are expected to gain more support. Currently, market expectations for an early rate cut have somewhat diminished compared to the beginning of the year. According to the Chicago Mercantile Exchange (CME) FedWatch, the interest rate futures market currently reflects about a 45% chance that the Fed will keep rates unchanged in January and then cut rates by at least 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting in March.