2023 Fourth Quarter GDP Review: Analyzing Economic Growth | Episode 115 | 03-28-2024

Join Megan Horneman, Chief Investment Officer, as she provides insights into the final GDP reading for the fourth quarter of 2023. In this update, Megan discusses the growth figures, highlighting the positive revisions in personal consumption and government spending, particularly in the service sector. Despite some downward adjustments in spending on goods, the overall economic outlook remains promising. Megan also touches on inflation trends, shedding light on the Fed's perspective. Looking ahead, she outlines GDP estimates for the upcoming quarters, emphasizing the importance of monitoring economic indicators. Stay informed with our weekly updates and don't hesitate to reach out with any questions or concerns at podcast at Verdence dot com.

Well, we officially closed out the last quarter of 2023. Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors. I'm coming to you on Thursday, March 28th, and what I'm talking about is the final read on GDP for the year of 2023. We get three different readings on GDP for the quarter we get an initial one, then we get revisions for a second one, and then we get a third one. Now, while there could be some revisions in the future, this is the one that we follow.

This third quarter, this final reading, the final reading for economic growth came in a bit higher than it was in the second reading, but it was much. It was also better than we saw in the advanced reading. So the final quarter of 2023 came in with growth of 3.4%. The upgrades were in personal consumption, but it was all the service spending, and this isn't surprising to us, because the data that we've seen in retail sales and personal spending has been primarily driven by the service sector. That was upgraded by a whole percentage point since that first reading. Spending on goods were actually downgraded by about 0.8%. Government spending was also upgraded. It was primarily driven by state and local government spending, though that was up 6% in the quarter. That was versus an expectation of 3.7%. In that first reading, year-over-year GDP was 3.1%. That was the best quarter we've seen since the first quarter of 2022.

And what the Fed is going to like is that the core price index for the quarter that revision actually came in a little bit lower, from 2.1% to 2.0%. Now we realize that this is backward looking. It does give the Fed a little bit of an indication maybe where the inflation trends are going, but this is probably the last good quarter that we're going to get from a GDP perspective. If you look at some of the estimates going forward, the estimate for the first quarter is 2%, 1.4% in the second quarter, 1.2% in the third quarter and then, for a small rebound in the fourth quarter, 1.5%. We will continue to watch these GDP numbers.

We are getting a lot of information for the first quarter of 24, which does confirm a slowdown here, but we'll get the actual official reading on first quarter GDP later in the month of April. That's all we have today. We'll be back next week. Tomorrow the markets are closed for the long Easter holiday, but we'll be back next week with a bunch more economic data. If you have any questions or concerns. Please feel free to reach out to podcasts at Verdence dot com. Thank you.