In the face of widespread prognostications of a coming recession, the U.S. economy wrapped up 2023 with a bang as real gross domestic product, or GDP, grew by an annual rate of 3.3% in the last quarter and the year ended with 2.5% annualized growth, according to a Commerce Department report Thursday.
Robust consumer spending and a labor market that remained resilient throughout 2023 helped buoy an economy that was beset by ongoing inflation, rising costs related to housing and elevated interest rates, including the highest credit card rates on record.
“This year has been like Rock ’Em Sock ’Em Robots, and the economy is knocking the blocks off the economists, always outperforming,” Dan North, senior economist with Allianz Trade Americas, told CNBC.
North added that Federal Reserve Chairman Jerome Powell “has got to have a smirk on his face this morning. Again, he’s defying the economists’ predictions with strong growth and inflation clearly coming under control.”
Most economists and even Powell himself had predicted or hinted at some level of recessionary conditions settling in at some point in 2023 but it never came to pass.
U.S. employers added 2.7 million jobs in 2023, according to Labor Department data, and while well down from 2022, it’s a rate that still outpaced pre-pandemic levels.
Inflation mostly ticked down throughout 2023, starting the year at 6.4% but declining to 3.1% in November before moving up slightly in December to 3.4%. While still over the Fed’s target rate of 2%, the monetary body continued a pause on adjusting its benchmark federal funds rate at its December meeting.
Last month, Phil Dean, senior economist for the University of Utah’s Kem C. Gardner Policy Institute, told the Deseret News the overall economy outpaced expectations for the year and is segueing into 2024 with positive energy.
“The U.S. economy showed remarkable resilience in the past year,” Dean said. “I didn’t expect doom and gloom but the national GDP, as a broad measure, showing growth every quarter was a surprise.
“I think it just demonstrates the strength of the U.S. economy ... and how many things we really do have going for us.”
Dean said even with the “gut punches” of the bank failures in the first quarter of the year, and ongoing challenges in affordable housing, the overall economy appears to be churning positively forward.