The Commerce Department’s final report on the U.S. real gross domestic product (GDP) growth for the third quarter of 2023 revealed a downward revision, settling at an annual rate of 4.9 percent. This adjustment comes after the initial “advance” estimate indicated a 4.9 percent growth, subsequently revised to 5.2 percent in the second estimate.
The revision primarily stemmed from a downward adjustment in consumer spending, while imports, which are deducted in GDP calculations, also saw a reduction.
The growth in real GDP was attributed to increased consumer spending, private inventory investment, exports, government spending at federal and state/local levels, and residential and nonresidential fixed investments, despite a rise in imports. Comparatively, real GDP saw a 2.1 percent increase in the second quarter.
An upswing in exports and improvements in consumer spending and private inventory investment primarily drove the third-quarter acceleration in real GDP. However, this was somewhat countered by a slowdown in nonresidential fixed investment.
According to Wells Fargo economists’ recent analysis, the estimated real GDP growth for the United States in 2023 was 2.4 percent. Despite this, the analysis highlighted signs of economic momentum slowing down, with emerging concerns in the household sector.
The analysis acknowledged the potential for a ‘soft landing’ in 2024. Still, it cautioned that even if an economic downturn is avoided, the pace of real GDP growth might stay below the trend in the upcoming quarters, largely due to the restrictive stance of monetary policy.