The United States economy grew 0.7% in the fourth quarter despite rate hikes

The US economy is still moving on the narrow path that allows it to avoid a recession despite the Federal Reserve's interest rate hikes, the most aggressive since the early 1980s. Gross domestic product grew by 0. 7% quarterly, that is, at an annualized rate of 2.9% in the fourth quarter of the year, according to data published this Thursday by the Department of Commerce.

It is a slight slowdown from 3.2% in the previous quarter.

The figure is somewhat above analysts' forecasts.

In the year as a whole, the gross domestic product (GDP) grew by 2.1%, compared to 5.9% in 2021, on the back of the recovery from the pandemic.

In the Thanksgiving and Christmas quarter, where consumption for travel and shopping accelerates, consumers faced price increases and increased their consumption.

The pandemic left a pocket of extra savings, and that reserve, along with strong job creation, fuels the engine of the US economy.

“Real GDP growth reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment, which were partly offset by declines in residential fixed investment and exports.

Imports, which remain in the calculation of GDP, decreased ”, explains the Bureau of Economic Analysis of the Department of Commerce.

With the data published today (a first preview that will be subject to review), the United States closed 2022 with notable growth;

high inflation (6.5% year-on-year), but which is the lowest since 2020, and an unemployment rate of 3.5%, which is equal to the minimum of the last half century.

Interest rate rises have slowed down some sectors (construction and home buying), but have not yet caused the feared recession.

Many economists believe that the danger is still there and that the United States is likely to experience a mild recession later this year, but the option of a soft landing (controlling inflation without a contraction of the economy) is still possible.

The GDP of the United States fell for two consecutive quarters in the first half of 2022, but due to specific factors and while employment was being generated strongly, with which economists avoid describing this setback as a recession.

The Federal Reserve has already slowed the pace of interest rate hikes, but economists and investors expect it to raise rates again at next week's meeting.

They expect a rise of 0.25 points, after that of 0.5 points in December, which placed the official price of money in the range of 4.25%-4.5%.

Central bank president Jerome Powell has insisted that more important than the pace is the level at which rates end up reaching and the length of time they remain high.

Powell won't back down until he sees that inflation is under control.

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