The US economy ended 2023 with a bang

• Real GDP grew at an annualized rate of 3.3% in the fourth quarter.
• That's above the forecast of 2.0%.

The US economy was still growing at a robust pace in the last quarter of 2023 but slowed down from earlier in the year, based on new real gross domestic product data released Thursday morning.

Real GDP rose at an annualized rate of 3.3% per the news release from the Bureau of Economic Analysis. That advance estimate is below the third estimate for the third quarter, which was an annualized rate of 4.9%. The latest figure was also above the forecast of 2.0%.

"Compared to the third quarter of 2023, the deceleration in real GDP in the fourth quarter primarily reflected slowdowns in private inventory investment, federal government spending, residential fixed investment, and consumer spending," Thursday's news release said.

Many areas saw increases in the last quarter, including exports and government spending.

"The increase in real GDP reflected increases in consumer spending, exports, state and local government spending, nonresidential fixed investment, federal government spending, private inventory investment, and residential fixed investment," the news release said.

The positive GDP numbers for the past few quarters show that the US has so far avoided a recession — although it's important to note that GDP isn't the only thing to consider when looking at a recession. There are different economic indicators, such as data involving employment, that economists consider when evaluating the business cycle.

The NABE (National Association for Business Economics) Business Conditions Survey shows a higher share of respondents are also feeling more optimistic about the country not experiencing a recession soon. The survey was done from December 28, 2023, to January 9, 2024. A post on NABE about it stated 91% of survey "respondents assign a probability of 50% or less to the U.S. entering a recession over the next 12 months, up from 79% of respondents who held this view in the October survey."

Steve Rattner, chairman and CEO of Willett Advisors, said in a recent Bloomberg interview that "I'm not predicting a recession" but given we're close to the edge, it could go either way.

"There are signs of the economy starting to weaken a little bit," Rattner said. "The jobs market is weakening a little bit. Retail sales are weakening on an inflation-adjusted basis a little bit. You do see signs of stresses and strains, savings rates, credit card usage, subprime auto delinquencies, things like that."

Rattner said "there's no question" that last year the economy was robust compared to expectations partly because there was more purchasing power.

Nonfarm payroll growth also suggests a strong jobs market last year despite smaller job growth.

"Payroll employment rose by 2.7 million in 2023 (an average monthly gain of 225,000), less than the increase of 4.8 million in 2022 (an average monthly gain of 399,000)," a Bureau of Labor Statistics news release stated.

Overall, real GDP saw a larger increase last year than in 2022 — 2.5% in 2023 compared to 1.9% in 2022. An increase in consumer spending was just one of the areas behind the increase in real GDP last year.

"The increase in real GDP in 2023 primarily reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, exports, and federal government spending that were partly offset by decreases in residential fixed investment and inventory investment," the news release stated.