Economic statistics are always backward looking. Today’s GDP report looks back at the fourth quarter of 2022 — according the first estimate from the Bureau of Economic Analysis (BEA), the U.S. economy grew by about 3 percent (annualized rate) in the last three months of 2022, roughly the same rate as the third quarter. That’s the blue line in the chart above. Meanwhile, the rate of price increases (inflation) fell from a little over 4 percent in Q3 to 3.2 percent in Q4 by the broad measure called the Personal Consumption Expenditures (PCE) Price Index.
The economy isn’t either stalling (yet) or overheating, and price inflation has come down nicely since the shock of the Russian invasion of Ukraine. To be sure, prices aren’t actually falling for many non-durable goods (think food) and services (think rent) yet, although they are falling for many durable goods (cars and suchlike). We will learn more about price details tomorrow when the BEA releases its comprehensive monthly table (my favorite source of price data) on PCE Price Index details. I won’t be able to write about what those more detailed price data say until the weekend at the earliest, since I’ll be on my bike all day Friday.
Of course, these backward-looking statistics may not be a great predictor of what’s happening right now, in early 2023. Retail sales fell in both November and December, and there have been a metric shit-ton of layoff announcements, particular in advertising-related industries (Google, Daily Kos), but also in retail (Amazon etc.). We could already be in a product goods recession, although it’s pretty clear that the labor markets overall are still doing OK for now (new unemployment claims aren’t spiking yet, and wages are still increasing).
I have to walk the dogs and get on a Zoom for the next couple hours, but will hop back on at about 3pm EST to update some stats and links, make any needed corrections, and answer any questions that are within my limited scope of knowledge. Thanks for reading!