Q4 US GDP Defies Expectations Again As It Expands by 3.3%
The US GDP report for Q4 was released a while ago, and once again it was impressive, coming at 3.3% for the last quarter of last year, against expectations of 2.0%. That gave the USD a quick push higher but then we saw a reversal back down following up, but there were other reports being released at the same time.
Today’s Q4 GDP reading came pretty close to the final Atlanta Fed tracker which showed a +2.4% ex[ansion. On the other hand, inflation rates continued to fall which might be a reason for the decline in the USD. However, this increases the real GDP, with commerce and government making big contributions.
Some analysts were anticipating the recent inventory buildups to decline in Q4, but this did not occur. The Federal Reserve has been attempting to cool down the economic activity in the US to bring inflation down they say, however, we all know this is inflation coming from outside, such as international price hikes. However, now that inflation is falling back to the FED target and economic activity remains strong, the FED has less reasons to lower interest rates.
The Q4 2023 US Gross Domestic Product First Reading
- Actual Q4 GDP: +3.3%
- Expected: +2.0%
- Previous (Final Q3): +4.9% (annualized)
Consumer Spending:
- Consumer Spending: +2.8% vs +3.1% prior
- Consumer Spending on Durables: +4.6% vs +6.7% prior
GDP Components:
- GDP Final Sales: +3.2% vs +3.6% prior
- GDP Deflator: +1.5%
- Core Personal Consumption Expenditures (PCE): +2.0% vs +2.0% prior
- Business Investment: +2.1% vs +10.0% prior
- Full report
Percentage Point Changes:
- Net Trade: +0.43 pp (percentage points) vs. +0.03 pp prior
- Inventories: +0.07 pp vs. +1.27 pp prior
- Government Spending: +0.56 pp vs. +0.99 pp prior
Other Details:
- The GDP deflator was 1.5%, lower than the expected +2.3%.
- Core PCE was +2.0%, meeting expectations.
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