Fourth quarter GDP (second estimate) grows 2.7%

Real GDP increased at a seasonally adjusted annual rate of 2.7% during the fourth quarter of 2022, according to the Bureau of Economic Analysis’s “second” estimate. Real GDP increased 3.2% in the third quarter of 2022.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.9 percent. The updated estimates primarily reflected a downward revision to consumer spending that was partly offset by an upward revision to nonresidential fixed investment (refer to “Updates to GDP”). Imports, which are a subtraction in the calculation of GDP, were revised up.

The increase in real GDP in the fourth quarter reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and exports. Imports, which are a subtraction in the calculation of GDP, decreased.

Consumption added 0.93 percentage points (pp) to growth; this follows a 1.54 pp addition during the fourth quarter of 2022. The increase in PCE was driven by services (led by healthcare and housing and utilities) offset by decreases in other durable goods recreational goods and vehicles. Inventories increased, adding 1.47 pp from GDP. Residential investment subtracted a total of 1.24 pp from GDP.

Business investment added 0.43 pp from GDP. Investment in intellectual property added 0.39 pp to GDP while equipment subtracted 0.17 pp.

Government spending increased, adding 0.63 pp to GDP. Federal and state-local government added 0.37 and 0.25 pp to GDP, respectively.

Read the BEA release.