In Line with Flash Estimate and Expectations
Consumption Rises 4.2%, Driving Growth
Core PCE Inflation Rate Revised Up to 2.7%
The United States achieved an economic growth rate in the low 2% range in the fourth quarter of last year. Inflation rebounded. It is analyzed that the U.S. economy continues to show solid growth, still exceeding its potential growth rate, supported by strong consumption.
According to the U.S. Bureau of Economic Analysis (BEA) on the 27th (local time), the preliminary real Gross Domestic Product (GDP) for the fourth quarter of last year increased by 2.3% annualized compared to the previous quarter.
This level matches the flash estimate and market expectations (both 2.3%) announced last month. The U.S. releases GDP growth rates three times: flash estimate, preliminary estimate, and final estimate. The preliminary growth rate for the fourth quarter of last year announced on this day is lower than the third quarter (3.1%) but still significantly exceeds the U.S. potential growth rate, estimated to be in the high 1% range.
Consumption, which accounts for two-thirds of the U.S. economy's growth engine, led the steady expansion. Personal consumption expenditures in the fourth quarter of last year increased by 4.2% compared to the previous quarter. This level surpasses the third quarter's personal consumption expenditure growth rate (3.7%) and matches both the preliminary and expected figures (4.2% each).
Inflation was revised upward. The core Personal Consumption Expenditures (PCE) price index, which the Federal Reserve (Fed) places the most importance on, rose 2.7% in the fourth quarter of last year, exceeding both the flash estimate and expectations announced last month (both 2.5%). This was due to rising service prices and also surpassed the third quarter's figure (2.2%). The core PCE price index excludes volatile energy and food prices to show the underlying trend of inflation.
According to Bloomberg's forecast, the U.S. economy is expected to record an annual growth rate of 2.3% this year. Although lower than last year's 2.8% due to easing labor markets and consumption, it is still expected to maintain solid growth. Additionally, concerns about inflation rising again have led to speculation that the Fed, which halted rate cuts last month, will continue a cautious monetary easing stance for the time being.
Meanwhile, last week, new unemployment claims in the U.S. exceeded market expectations, reaching the highest level since October last year. According to the U.S. Department of Labor, new unemployment claims for the week of February 16?22 totaled 242,000, an increase of 22,000 from the revised previous week's figure (220,000). This was 20,000 more than expert expectations (222,000). As the Trump administration's second term undertook federal government restructuring, unemployment claims in Washington D.C. rose to the highest level in 1 year and 11 months since March 2023. Layoffs at some companies such as Starbucks and Meta, the parent company of Facebook, are also analyzed to have had an impact.
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