In the last three months of 2022, the US economy grew by 2.9% compared to the same period last year, the US Department of Commerce said Thursday.
The growth was driven by increases in consumer spending, business investment, and government spending, the department reported. US consumer spending was also up 2.1% compared to the same time last year. That spending remained strong as inflation began to ease. And the US labor market remained tight.
Overall, for the year, GDP grew 2.1% compared to 2021. That growth rate is inline with how much the US economy grew in the decade following the Great Recession, which was between 1.5% and 2.9% each year.
“We’re at the phase of this post-pandemic recovery where the economy is gloriously, splendidly... boring,” Justin Wolfers, an economist at University of Michigan, said on Twitter.
Notably, the US economy continued its expansion last year in the face of inflation, higher interest rates, the ongoing war in Ukraine, and fears of a recession.
How the US economy fares in 2023 will largely depend on how consumer spending holds up in the coming months.
Despite the overall growth in 2022, the economy showed signs of cooling in the fourth quarter, dipping slightly from 3.2% in the third quarter. Retail sales also fell in the last two months of 2022. The US Federal Reserve signaled it will continue to increase interest rates to tame inflation, which could further cool economic growth.
In the first two quarters of 2022, the US economy showed negative growth, which economists say offers mixed signals and could point to some economic uncertainty.
“We’re in a period where the pain is hitting pockets of the economy at different times,” Liz Ann Sonders, chief investment strategist at Charles Schwab, told the Washington Post.
The GDP data is preliminary and is expected to be revised in February.