GDP grew at 2.6% rate in fourth quarter of 2022 despite pressure from rising rates

The Bureau of Economic Analysis released its revised estimate and reported that the economy grew at an annual rate of 2.6% in 2022’s fourth quarter amidst economic challenges. This is a slightly lower adjusted value when compared to the previous estimated figure of 2.7%. Around the end of the year, household spending and business investment slowed down according to the report, which is the final GDP estimate for 2022’s fourth quarter.

In 2022, the economy grew by 2.1%, a year that saw recession fears and a significant surge in inflation, prompting the Federal Reserve to address pricing issues through interest rate hikes. This was preceded by an exceptional 5.9% GDP growth in 2021, which was attributed to the reopening and the recovery of the economy from pandemic lows.

The first two quarters of 2022 recorded negative GDP growth, which declined, boosting economists’ concerns signifying a recession. However, the economy’s positive growth on the year was still positive.

Crippling inflation characterized 2022’s most notable economic trend, which caused financial instability for some and lowered the standards of living across the country. But with the Fed’s effort to curb inflation, a recession is still possible as inflation significantly exceeded the Fed’s target of 2%, reaching 6% in February for the year ending.

The rise in interest rates has been mild, with the Fed hiking quarterly rates by a quarter percentage point, aimed at taming inflation. The labor market remained robust with job additions of 311,000 in February, increasing the unemployment rate to 3.6%, a remarkably low rate by historical standards. In September, the unemployment rate hit the lowest level since 1969, declining to 3.4%.