WASHINGTON (AP) — The United States economy expanded at a strong 3.4% annual pace from October to December, an improvement from the previous estimate, according to government reports released on Thursday.
Initially, the government had estimated a 3.2% annual growth rate for the last quarter.
The revised data from the Commerce Department, which measures the nation's gross domestic product (GDP), confirmed a slowdown from the 4.9% growth in the July-September quarter.
Despite this, the latest growth figures indicate a solid performance, driven by increased consumer spending, exports, and business investments in buildings and software.
This marks the sixth consecutive quarter where the economy has grown at an annual rate exceeding 2%.
For the full year of 2023, the U.S. economy, the world's largest, grew by 2.5%, up from 1.9% in 2022.
The current January-March quarter is expected to show slower growth, but still a respectable 2.1% annual rate, according to a forecast by the Federal Reserve Bank of Atlanta.
The economy's resilience in the face of higher borrowing rates set by the Federal Reserve to combat inflation has surprised many. Despite the Fed raising its benchmark rate 11 times since March 2022 to a 23-year high, borrowing remains costly for businesses and households. Nevertheless, the economy has continued to expand, with strong job growth averaging 251,000 new jobs per month last year and 265,000 per month from December to February.
Simultaneously, inflation has moderated, dropping from a peak of 9.1% in June 2022 to 3.2%, though it remains above the Fed's 2% target.
The combination of solid growth and decreasing inflation has raised hopes that the Fed can achieve a "soft landing" by curbing inflation without triggering a recession.
The report released on Thursday was the Commerce Department's final estimate for fourth-quarter GDP growth. The department is set to release its initial estimate for January-March growth on April 25.