The sharp increase in interest rates by the Federal Reserve has curbed economic activity. The US economy slowed down slightly in the fourth quarter of last year, but it still exceeded market expectations.

According to data released by the US Department of Commerce on Thursday, the annual growth rate of real GDP in the United States in the fourth quarter of last year was 2.9%, which was higher than the 2.6% predicted by economists. This is lower than the growth rate of 3.2% in the third quarter, but considering the austerity measures taken by the Federal Reserve, the US economy is still expanding at a healthy rate.

Personal consumption, the largest component of the American economy, accounts for about 68% of GDP, with a growth rate of 2. 1%, lower than expected, and the previous value was 2.3%. Although personal consumption is still growing positively, the GDP report shows some signs that American consumers are under pressure. Their wages can't keep up with inflation, which forces them to withdraw their savings from the government's epidemic prevention and rescue plan. The burden of rising prices and rising borrowing costs is increasing, which indicates that the economic prospects of the United States are bleak.

About half of GDP growth comes from inventory growth. Government expenditure reached the biggest increase since the beginning of 20021. In addition, the increase of non-resident fixed investment also helps to improve GDP data.

Projects that drag down GDP include: residential fixed investment and exports. Among them, residential fixed investment plummeted by 26.7%, highlighting the sharp decline in the real estate market and obvious signs of recession. Exports fell 1.3%.

The inflation indicator closely watched by the Federal Reserve, the US personal consumption expenditure (PCE) price index, increased by 3.2% year-on-year in the fourth quarter, lower than the 4.3% in the third quarter, setting the slowest growth rate since 2020. Compared with 4.7% in the previous two quarters, the PCE core price index excluding food and energy increased by 3.9%. The data shows that inflation in the United States dropped significantly in the fourth quarter, which is consistent with the trend reflected by CPI data. The monthly data of 65438+February PCE price index will be released this Friday.

Since March last year, the Federal Reserve has raised its policy interest rate by more than 4 percentage points. At next week's FOMC meeting, it is expected that the Fed will slow down and cut the rate hike to 25 basis points to judge the degree of inflation slowdown and its impact on the economy. Fed officials generally support that the federal funds rate exceeds 5% and hope to keep it at least until the end of this year, which means that interest rates will be further raised after the February decision.

According to the analysis, the latest GDP data further proves that the US economy is more resilient than expected in the case of a sharp increase in borrowing costs, and it also shows that the actions of the Federal Reserve are beginning to produce more significant results.

Real estate and manufacturing are deteriorating rapidly. Some enterprises are rethinking their capital expenditure plans. Manufacturing and service companies began to cut costs, freeze recruitment, and even lay off employees significantly. The number of layoffs in industries including banking and technology is staggering. Along with this, consumer spending is sluggish, and some recent data, such as retail and car sales data, show that American families are beginning to tighten. This will help ease inflationary pressure.

After the US GDP shrank for two consecutive quarters in the first half of 2022, there was a debate on whether the US economy had fallen into recession. For a long time, this has been regarded as the standard of "technical recession". However, since then, driven by consumer spending and the labor market, the US economy has turned to positive growth in the last two quarters.

Although no Fed officials have made a recession forecast yet, they insist that a "soft landing" is still possible. Many economists predict that the United States will fall into recession later this year as the unemployment rate rises from the current 3.5% to nearly 5%. According to a survey by Bloomberg, economists predict that the US economy will shrink in the second and third quarters, and the possibility of recession this year is 65%.

The company's profit report in the fourth quarter also shows the potential profit recession. According to Luft's data, nearly 20% of companies in the S&P 500 have published financial reports. Although the revenue increased by 4. 1%, the profit decreased by 3%.

After the release of GDP data in the fourth quarter of the United States, American stock futures rose before the broader market. The Standard & Poor's 500 Index rose 0.49%, the Dow Jones Industrial Average rose 0.08%, and the Nasdaq Composite Index rose 1.28%.