U.S. GDP Growth Is Stronger-Than-Expected in Q4; Price Gain Slows
by:Tom Moeller
|in:Economy in Brief
Summary
- Growth in domestic final demand remains firm.
- Foreign trade & inventories add to growth.
- Price index gain recedes by more than half.
Real GDP grew 3.3% (SAAR) during Q4’23 following a 4.9% Q3 increase. A 2.0% rise had been expected in the Action Economics Forecast Survey. Real GDP grew 3.1% on a Q4/Q4 basis, after a 0.7% rise in 2022 and 5.4% growth in 2021. Growth averaged 2.5% last year versus 1.9% in 2022.
International trade & the change in inventories surprisingly added to growth last quarter. The 0.43 percentage point addition from foreign trade deficit improvement followed two straight quarters of minimal add. It reflected 6.3% export growth (2.1% y/y) which followed a 5.4% Q3 rise. Imports grew 1.9% (-0.2% y/y) after rising 4.2%. Inventories added 0.07 percentage point to growth, after contributing 1.27 point to growth in the third quarter.
Growth in real final sales to domestic purchasers eased to a still-firm 2.7% (3.0% y/y) after rising 3.5% in Q3. Personal consumption expenditures rose 2.8% (2.6% y/y) after a 3.1% rise, adding 1.91 percentage points to Q3 growth. Durable goods spending growth of 4.6% (6.1% y/y) followed 6.7% growth. Motor vehicle expenditures fell 1.1% (+4.1% y/y), about as it did in Q3. Furniture & appliance buying rose 4.1% (2.8% y/y) after a 5.5% gain in Q3 while recreational goods & vehicle purchases strengthened 10.9% (12.1% y/y) after strengthening 16.9% in Q3.
Nondurable goods outlays improved 3.4% (2.2% y/y) following 3.9% growth in Q3. Apparel outlays rose 6.0% (1.4% y/y) after a 6.2% increase while food & beverage spending rose 1.5% (0.3% y/y) following a 1.9% gain. Outlays on gasoline & other energy products rose 0.8% (2.9% y/y) after falling 1.0% in Q3.
Spending on services increased 2.4% (2.2% y/y) last quarter following a 2.2% gain. Transportation services outlays growth of 5.9% (2.2% y/y) followed a 0.9% rise. Housing & utilities outlays rose 0.4% (0.6% y/y) after a 3.0% improvement. Health care purchases rose 3.4% (4.6% y/y) following a 2.7% increase. Restaurant & hotel accommodations rose 7.6% (4.1% y/y) after gaining 7.1% in Q3, while growth in recreation outlays picked up to 5.1% (4.1% y/y) after a 2.3% rise in Q3.
Business fixed investment increased 1.9% (4.1% y/y) last quarter following a 1.5% Q3 rise as spending on nonresidential structures increased 3.2% (14.8% y/y) after rising 11.2% in Q3. Equipment investment improved 1.0% (-0.1% y/y) after falling 4.4%. Information processing investment surged 17.4% (0.4% y/y) following four consecutive quarterly declines, while industrial equipment outlays rose 3.7% (-0.8% y/y), about as they did in Q3. Transportation equipment spending weakened 2 3.2% (+2.3% y/y) after a 1.7% drop in Q3. Investment in intellectual property products rose 2.1% (2.6% y/y) after a 1.8% rise.
Residential structures investment increased 1.0% (-0.1% y/y) after a 6.7% increase.
Government spending increased 3.3% (4.3% y/y), accounting for 0.56 percentage points of GDP growth, after a 5.8% rise. Federal government spending growth of 2.5% (4.0% y/y) came after a 7.1% jump. State & local government spending grew 3.7% (4.5% y/y) following a 5.0% Q3 rise.
The GDP price index rose 1.5% (2.6% y/y) after a 3.3% Q3 gain. A 2.6% rise had been expected. The PCE price index increased 1.7% (2.7% y/y) after a 2.6% rise. The PCE price index excluding food and energy prices rose 2.0% (3.2% y/y), the same as it did in Q3. The PCE goods price index fell 1.9% (unchanged y/y) as gasoline prices fell and services prices rose 3.5% (4.1% y/y), the same as they did in Q3. The services price index less energy & housing rose 2.6% (3.5% y/y) after a 2.9% rise.
The business fixed investment price index rose 2.1% (2.4% y/y) following a 0.9% rise. The residential investment price index increased 5.5% (1.7% y/y) after a 4.8% gain. The government spending price index rose 1.9% (1.8% y/y) after strengthening 5.1% in the third quarter.
The GDP data can be found in Haver’s USECON and USNA databases. USNA contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in AS1REPNA.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
