US economy grew by 3.3% over the past year - ending fears of recession and sending the S&P and Dow up
- The figures defied expectations - illustrating the durability of the US economy
- Consumers and businesses have continued to spend despite high interest rates
- Wall Street's benchmark indices rose on opening Thursday following the news
The US economy grew much faster than expected in the final three months of last year, trouncing expectations as consumers and businesses continued to spend.
America easily missed going into recession - which many analysts had forecast was inevitable.
Gross domestic product (GDP), a measure of all the goods and services produced, jumped 3.3 percent annually in October through December, the Commerce Department reported Thursday. Analysts' consensus had been for a fourth quarter growth rate of just 2 percent.
Wall Street's main indexes soared upon opening, as a strong economic growth raised hopes of the likelihood of a rare 'soft landing' - when inflation is brought down without a recession or big increase in unemployment.
The S&P 500, Nasdaq Composite and Dow Jones Industrial Average all opened in the green - after the S&P 500 closed at another record high on Wednesday.
![The US economy grew much faster than expected in the final three months of last year, trouncing expectations as consumers and businesses continued to spend](https://i.dailymail.co.uk/1s/2024/01/25/15/80464143-13006095-image-a-75_1706195745637.jpg)
The US economy grew much faster than expected in the final three months of last year, trouncing expectations as consumers and businesses continued to spend
![The S&P 500 soared following news GDP jumped 3.3 percent in the fourth quarter of 2023](https://i.dailymail.co.uk/1s/2024/01/25/15/80464147-13006095-image-a-76_1706195762557.jpg)
The S&P 500 soared following news GDP jumped 3.3 percent in the fourth quarter of 2023
It was a slightly slower pace than the 4.9 percent rate in the third quarter from July through September - which was thanks to a surge in consumer spending over the summer months.
But the latest figures reflect the surprising durability of the US economy - and the willingness of the American consumer to spend despite high interest rates and price levels.
It marks the sixth straight quarter in which GDP has grown at an annual pace of 2 percent or more.
As well as better than expected GDP figures, there was also good news on inflation.
A measure preferred by the Federal Reserve - core prices for personal consumption expenditure - rose by 3.2 percent annually, down from 5.1 percent a year ago.
Beth Ann Bovino, chief economist at US Bank, told CNBC the two sets of data - GDP and inflation - added up to 'supersonic Goldilocks, because it’s really a strong number yet inflation hasn’t shown up.
'Everybody wanted to have fun. People bought new cars, a lot of recreation spending as well as taking trips. We've been expecting a soft landing for some time. This is just one step in that direction.'
![The latest figures reflect the surprising durability of the US economy - and the willingness of the American consumer to spend despite high interest rates and price levels](https://i.dailymail.co.uk/1s/2024/01/25/15/80462103-13006095-image-a-61_1706195352587.jpg)
The latest figures reflect the surprising durability of the US economy - and the willingness of the American consumer to spend despite high interest rates and price levels
In 2023 as a whole, the economy grew at a 2.5 percent annualized rate. This was also well ahead of Wall Street estimates and outpaced the 1.9 percent yearly growth in 2022.
Consumers also drove the fourth-quarter growth, as was the case throughout last year.
Their spending expanded at a 2.8 percent annual rate in October to December - with people splashing out on clothing, furniture, vehicles, hotels and eating out.
Local, state and federal government spending also contributed to the growth.
'Prospects are good that the economy will continue to perform well this year,' Scott Hoyt, senior director at Moody's Analytics, said in a release.
'Consumers are doing their part and spending just enough to support broader economic growth.'
The latest GDP figures show the US has skirted past recession territory. Consumers are still spending, and a rallying stock market has boosted Americans' retirement accounts.
At the same time, it demonstrates how the economy has cooled somewhat in recent months - but economists remain divided as to when the Federal Reserve may begin cutting interest rates.
Market expectations of that first rate cut coming in March have been falling in recent weeks.