GDP grew at 2.6% rate in fourth quarter of 2022 despite pressure from rising rates
Zachary Halaschak
Video Embed
The economy grew at a 2.6% annual rate in the fourth quarter of last year, showing strength in the face of economic challenges, the Bureau of Economic Analysis reported Thursday in a revised estimate.
The GDP numbers, adjusted for inflation, were revised down slightly from the previous estimate of 2.7%. Thursday’s report is the final GDP estimate for last year’s fourth quarter.
For all of 2022, the economy grew 2.1% — a year marked first by recession fears and then by the biggest surge of inflation in decades, which prompted an intense campaign by the Federal Reserve to ease price pressures through interest rate hikes.
Last year’s GDP growth follows 2021’s gangbuster 5.9% GDP growth, which was so unusually high because it marked a year of reopening and economic recovery from the lows of the pandemic.
BORROWING FROM EMERGENCY FED PROGRAM TO PREVENT BANKING CRISIS RISES TO $54 BILLION
The year 2022 began on a sour note, with the first two quarters of 2022 registering negative GDP growth. That alarmed many economists, as two consecutive quarters of negative growth is typically taken to define a recession. But positive GDP growth resumed in the second two quarters, and growth on the year was also positive.
While there was talk of a recession in the first part of last year, the most notable economic trend of 2022 was the rise of crippling inflation, which lowered the standards of living for households across the country and caused financial instability for some.
Yet the Fed’s quest to tamp down inflation may still include a recession. Inflation stood at 6% for the year ending in February, according to the consumer price index, far above the Fed’s target, which is 2%.
Despite the sudden failure of Silicon Valley Bank earlier this month, the Fed opted to hike interest rates once again in an effort to tame inflation. The central bank raised rates by a mild quarter percentage point, although prior to the revision, some economists were expecting the Fed to pause its tightening to quell fears of a banking crisis.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Still, the labor market is rip-roaring despite the barrage of rate hiking.
The economy added 311,000 jobs in February, more than expected, and the unemployment rate ticked up a bit to 3.6%, which is a very low figure by historical standards. The unemployment rate had previously dropped to a shocking 3.4%, the lowest since 1969.