The economy continues to recover, however, consumers continue to spend less.
By Manuel Gutierrez, Consulting Economist to NKBA
In Q4 2022, Annualized GDP growth was a moderate 2.7 percent in Q4 2022. Still, the good news is that the economy continues the dramatic reversal that began after the first half of last year with positive GDP growth.
- Every major component of GDP grew in Q4, except for foreign trade. Private investment increased by 3.7 percent — the fastest growth of all components. Government spending came in second at 3.6 percent. Overall, however, government spending actually fell by 0.6 percent as a result of a reduction in pandemic-related spending.
- Consumer spending growth was just 1.4 percent in Q4 2022, lower than the 2.3 percent growth experienced between 2010 and 2019 in the decade prior to the pandemic. Exports fell 1.6 percent, while imports declined 4.2 percent.
- Consumers cut spending in several categories in the fourth quarter, with gasoline and other types of energy spend down 3.6 percent. Additionally, consumers decreased spending on Household Durable goods — such as appliances — which were down 0.5 percent from 2021.
- Health care and housing were the two areas where consumers spent the most in Q4. Health care captured 16.7 percent, or $2.23 trillion, in the fourth quarter.
- Housing, including rental payments and maintenance, was 15.6 percent of Q4 spend, though it gained only 1.4 percent YOY. A market research report released by IBIS World, however, indicated that high employment levels in the next five years will likely lead to higher per capita disposable income, making it possible for homeowners to increase spending on home improvements.
