US GDP at 2.9 Percent, Recession on Way?

US Economy/GDP 2.9%

The US economy ended the year of 2022 growing at a 2.9% annualized rate in the final quarter of the year. Unfortunately  there are signs of slowing demand as hard rising interest rate hikes are beginning to ease  growth figures into 2023. The Gross Domestic Product (GDP) increase in the fourth quarter was  0.3 points lower than the 3.2% gain recorded in the third quarter of 2022.

It appears that almost half of the GDP increase was due to inventory growth, while the US government expenditures were among the biggest gain since early 2021. Personal consumption, which is the largest and most critical part of the economy,  increased at a below the forecasted rate of 2.1%.

It would appear rom this data that the Federal Reserve might be able to create a soft landing for the economy with Fed officials set to slow the rate of increases at their gathering next week and from then conclude when to pivot their monetary policy to avoid a federal reserve induced recession.

The data  shows the American consumers, struggling under inflation and lack luster  wage growth are failing to balance budgets against the tide of inflation.    Consumers also continued to  to draw down on their savings reserves which a lot of them  accumulated from government pandemic-relief programs over the previous couple of years. There is no end in sight to the financial burden and hardships that the current monetary policy is inflecting on consumers with  elevated  consumer prices, along side extraordinary  higher levels of borrowing costs which is really showing signs of crippling the economy, on a personal and then eventually corporate front.

Will a Recession Now Happen?

The economy is showing signs of stress, as a result some leading economists and analysts, who are experts in this field,  predict a recession in the near future. However, the Federal Reserve is taking critical steps to mitigate the risk and it is not yet clear whether the economy will enter a recession. But many economists believe that the Federal Reserve has already inflicted enough damage on the economy and the consumer, so a recession is now a inevitable consequence, the question now is just when?

 

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