The U.S. economy maintained a strong pace of growth in the fourth quarter as consumers boosted spending on goods, but momentum appears to have slowed considerably towards the end of the year, with higher interest rates eroding demand. | Reuters
Robust second-half growth erased the 1.1 percent contraction in the first six months of the year. For all for 2022, the economy expanded 2.1 percent , down from the 5.9 percent logged in 2021. The Fed last year raised its policy rate by 425 basis points from near zero to a 4.25 percent -4.5 percent range, the highest since late 2007.
But demand for long-lasting manufactured goods, which are mostly bought on credit, has fizzled and some households, especially lower income, have depleted their savings. Business spending also lost some luster as the fourth quarter ended.Despite the clear signs of a weak handover to 2023, some economists are cautiously optimistic that the economy will skirt an outright recession, but rather suffer a rolling downturn, where sectors decline in turn rather than all at once.
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