Daily Management Review

US Fourth-Quarter Growth Raised Up; Weekly Unemployment Claims Drop


US Fourth-Quarter Growth Raised Up; Weekly Unemployment Claims Drop
In the fourth quarter, the US economy expanded faster than expected, driven by strong consumer spending and business investment in nonresidential infrastructure such as factories.
Gross domestic product expanded at a 3.4% annualised rate last quarter, up from the previously reported 3.2% pace, according to the Commerce Department's Bureau of Economic Analysis' third estimate of fourth-quarter GDP.
The revision reflected increases in consumer spending, nonresidential fixed investment, and state and local government spending.
Reuters polled economists, who predicted no revisions to GDP growth. The economy is growing faster than what Federal Reserve officials consider to be a non-inflationary growth rate of 1.8%, and it continues to outperform its global rivals despite the US central bank raising interest rates by 525 basis points since March 2022 to combat inflation.
When measured by income, the economy grew at a strong 4.8% pace. Gross domestic income (GDI) grew by 1.9% during the July-September quarter. In theory, GDP and GDI should be the same, but they are not since they are estimated using separate and generally independent source data.
A rising discrepancy between GDI and GDP in previous quarters aroused concerns among some economists that the economy was not as strong as the GDP data indicated. The increase in GDI reflected rising wages.
U.S. stocks finished higher on Wednesday, with the S&P 500 reaching another closing record ahead of Friday's important inflation report.
The economy is supported by a strong labour market, which keeps wages rising and drives consumer spending. Growth predictions for the first quarter are hovering around 2.0%.
An additional report by the Labour Department on Thursday revealed that initial requests for state unemployment benefits declined 2,000 to a seasonally appropriated 210,000 for the week ending March 23. Economists had expected 212,000 claims in the last week. 
Since February, claims have hovered between 200,000 and 213,000. Despite a wave of high-profile layoffs at the start of the year, the majority of firms are keeping their employees.
The number of people getting benefits after the first week of aid, which is a proxy for hiring, grew by 24,000 to 1.819 million during the week ending March 16, according to the claims report.