Washington: The U.S. economy likely rolled out of 2022 with momentum, registering decent growth in the face of painful inflation, high interest rates and rising concern that a recession may be months away.
Economists have estimated that the gross domestic product — the broadest measure of economic output — grew at a 2.3 percent annual pace from October through December, according to a survey of forecasters by the data firm FactSet.
The Commerce Department will issue its first of three estimates of fourth-quarter GDP growth at 8:30 a.m. Eastern time Thursday.
Despite a likely second straight quarter of expansion, the economy is widely expected to slow and then slide into a recession sometime in the coming months as increasingly high interest rates, engineered by the Federal Reserve, take a toll. The Fed’s rate hikes have inflated borrowing costs for consumers and businesses, from mortgages to auto loans to corporate credit.
The housing market, which is especially vulnerable to higher loan rates, has been badly bruised: Sales of existing homes have dropped for 11 straight months. Investment in housing plunged at a 27% annual rate from July through September.
And consumer spending, which fuels roughly 70 percent of the entire economy, is likely to soften in the months ahead, along with the still-robust job market. The resilience of the labor market has been a major surprise. Last year, employers added 4.5 million jobs, second only to the 6.7 million that were added in 2021 in government records going back to 1940. And last month’s unemployment rate, 3.5 percent, matched a 53-year low.