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US economy grew 2.1% in 2022, bouncing back from negative first half

Jan 26

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The U.S. economy grew 2.1% in 2022, despite widespread fears the country was heading toward a recession. That’s according to the latest gross domestic product data from the Bureau of Economic Analysis out Thursday.

In the fourth quarter of 2022, the advanced estimate shows a growth of 2.9%, slightly above analysts’ expectations for the quarter. It signifies slightly slower growth compared with the third quarter, which was revised up to 3.2%.

Still, the data shows the U.S. trucked through a strong six months to cap off the year, after starting it with two negative quarters.

Economists aren’t exhaling just yet. Despite the solid growth, many are still waiting for the lagging implications of the Federal Reserve’s aggressive rate hike campaign. Visible signs in the economy include the housing market’s significant tumble and widespread layoffs in the tech sector.

For all the signs the economy is on solid footing, many major banks are still expecting a downturn in 2023, saying that it can take many months for the Fed’s actions to grab hold. But others are starting to note that there’s a chance the Fed can still stick a soft landing after hiking rates in less than a year from near-zero to a range of 4.25% to 4.5%, the highest it has been since the start of 2008.

The Federal Reserve’s next meeting is scheduled for Jan. 31-Feb. 1, where markets are pricing in a 25-basis-point increase in the rate. The Fed has showed resolve in keeping interest rates high through 2023, insisting there will not be a Fed pivot, but markets aren’t as confident.

The driving force behind the rate hike campaign, 4-decade high inflation, has shown significant signs of cooling in the final months of 2022. From June’s 9.1% consumer inflation peak, prices fell to a 6.5% annual rise by December. From November to December, consumer prices actually experienced deflation, falling 0.1% on the month. Still, it’s a long way to the Fed’s 2% inflation target.

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SIMONE DEL ROSARIO: GOOD MORNING. THE U-S ECONOMY KEPT TRUCKING ALONG THROUGH THE END OF 2022. WE JUST GOT THE LATEST GROSS DOMESTIC PRODUCT NUMBERS OUT THIS MORNING FROM THE BUREAU OF ECONOMIC ANALYSIS.

THEY SHOW THE U-S ECONOMY GREW 2.1% ON THE YEAR, DESPITE WIDESPREAD FEARS THE COUNTRY WAS HEADING TOWARD A RECESSION.

IN THE FOURTH QUARTER, THE ADVANCED ESTIMATE SHOWS A GROWTH OF 2.9%, SLIGHTLY ABOVE EXPECTED.

THAT’S COMPARED WITH THIRD QUARTER GROWTH OF 3.2%. 

SO THE COUNTRY EXHIBITED A STRONG SIX MONTHS TO CAP OFF THE YEAR AFTER STARTING IT WITH TWO NEGATIVE QUARTERS.

ECONOMISTS AREN’T EXHALING JUST YET.

DESPITE THE SOLID GROWTH, MANY ARE STILL WAITING FOR THE LAGGING IMPLICATIONS OF THE FEDERAL RESERVE’S AGGRESSIVE RATE HIKE CAMPAIGN.

THE HOUSING MARKET HAS TAKEN A SIGNIFICANT TUMBLE, AND WE’RE SEEING WIDESPREAD LAYOFFS IN THE TECH SECTOR.

SO DESPITE SIGNS THE ECONOMY IS ON SOLID FOOTING, MANY MAJOR BANKS ARE STILL EXPECTING A DOWNTURN THIS YEAR, SAYING IT CAN TAKE MANY MONTHS FOR THE FED’S ACTIONS TO GRAB HOLD. BUT OTHERS SAY THERE’S STILL A CHANCE THE FED CAN STICK A SOFT LANDING.

I’M SIMONE DEL ROSARIO IN NEW YORK IT’S JUST BUSINESS.


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