U.S. GDP Growth Moderates as Final Demand Slows
by:Tom Moeller
|in:Economy in Brief
Summary
- Restrained business investment accompanies steady gain in consumer spending.
- Inventory growth exceeds trade deficit improvement.
- Price gains decelerate further.
Real GDP grew 2.9% at an annual rate (1.0% y/y) during Q4'22 following 3.2% growth in Q3. The latest figure compares to expectations for a 2.7% rise in the Action Economics Forecast Survey.
Faster inventory accumulation added 1.5 percentage point to growth last quarter following a 1.2 percentage point subtraction in Q3. Improvement in the foreign trade deficit added 0.6 percentage point to growth last quarter after a 2.9 percentage point addition in Q3. The gain occurred as exports fell 1.3% (+5.3% y/y) after rising 14.6% in Q3. Imports weakened 4.6% (+1.7% y/y) following a 7.3% decline.
Growth in domestic final demand slowed to 0.8% (1.0% y/y) following a 1.5% Q3 rise. Real personal consumption expenditure growth of 2.1% last quarter (1.9% y/y) followed 2.2% growth in Q3. Durable goods outlays edged 0.5% higher (1.1% y/y). Spending on motor vehicles & parts gained 7.4% (-0.6% y/y), but furniture & appliance outlays rose just 0.4% (-0.2% y/y). Spending on recreational goods & vehicles declined 1.7% (+4.8% y/y). In the nondurable goods sector, spending rose 1.5% (-1.4% y/y). Outlays on food & beverages rose 1.1% (-4.9 y/y) following three straight quarters of decline. Clothing outlays improved 0.8% (1.4% y/y) while gasoline & oil expenditures rose 2.6% (-3.2% y/y), also following three straight quarters of decline. Purchases of services strengthened 2.6% (3.2% y/y). Housing & utilities outlays gained 1.8% (1.4% y/y) and health care outlays increased 3.7% (2.3% y/y). Spending on recreation increased 3.2% (4.5% y/y) while spending at restaurants & hotels increased 1.7% (5.76% y/y).
Business fixed investment rose 0.7% (3.7% y/y) in Q4’22 after strengthening 6.2% in Q3. Structures investment rose 0.4% but had been falling since the end of 2019. Equipment investment fell 3.8% (+3.8% y/y) reflecting a 23.4% decline (-2.1% y/y) in information processing equipment and a 31.0% gain (28.0% y/y) in transportation equipment. Investment in industrial equipment rose 2.2% (-1.0% y/y) while investment in intellectual property products rose 5.3% (7.9% y/y), remaining strong since the end of the 2020 recession.
Residential investment declined for the seventh consecutive quarter, tumbling 26.7% (-19.2% y/y) in Q4.
Government spending increased 3.7% (0.8% y/y) in Q4’22, the same as in Q3. Federal government spending surged 6.2% (0.2% y/y) as defense spending rose 2.4% (-0.1% y/y) but nondefense outlays jumped 11.2% (0.6% y/y). State & local government spending rose 2.3% (1.3% y/y).
The GDP chain price index increased 3.5% (6.3% y/y) last quarter, the weakest increase in two years and down from 9.0% in Q2. The Action Economics Forecast Survey expected a 3.2% increase. The PCE price Index rose 3.2% (5.5% y/y) after increasing 4.3%. The PCE price index less food & energy gained 3.9% (4.7% y/y), down from 5.6% in Q1. The nonresidential investment price index rose 3.5% (6.6% y/y). The equipment price index improved 6.2% (7.2% y/y) but the intellectual property products price index eased 0.5% (+2.2% y/y). The residential investment price index rose 7.7% (12.4% y/y) following an 8.1% gain. The government spending price index rose 3.0% (6.7% y/y).
The GDP figures 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. Both databases include tables of the newly published not seasonally adjusted data. 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.
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