The Economy Grows More Than Expected, Soothing Recession Fears

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What's Happening Today

If you were worried about the U.S. economy tipping into a recession, we have some good news that could soothe some of your worries—at least for now. The Commerce Department released its advance estimate of gross domestic product (GDP) this morning, revealing the U.S. economy grew more than expected in the fourth quarter of 2022.

The report showed GDP grew at an annual rate of 2.9% last quarter, slightly more than economists expected, after a 3.2% rise in the third quarter. GDP is made up of a multitude of factors, including consumer spending, and trade and business inventories, with consumer spending accounting for close to 70%.

Economists and market watchers often look at GDP to see if the country's economy is growing and if we are headed into a recession . And that growth in the fourth quarter indicates that the recession many experts forecast is not here yet.

A monthly report on durable goods released by the Census Bureau this morning also suggested demand expanded last month rather than contracted. Big ticket orders for items like appliances jumped 5.6% to $286.9 billion in December, well above the 2.4% economists had anticipated.

And in another sign of strength from the labor market, the Labor Department reported first-time claims for unemployment benefits decreased by 6,000 to 186,000 last week. Economists had originally projected they would increase.

- Kara

What's Happening Today

Jobless Claims Fall, Pointing to Still-Tight Labor Market (The Wall Street Journal)

Is It Still a Good Time To Switch Jobs? (The Balance)

IRS Warns Tax Refunds May Be 'Somewhat Lower.' With High Inflation, That's a 'Double Whammy' for Families, Says Advisor (CNBC)

States Without an Estate Tax or Inheritance Tax (The Balance)

3 Homeowners On How They Manage Home-Related Expenses (The Balance)

10 Home Improvements That Do Not Add Value (The Balance)

How To Claim the Student Loan Interest Deduction (The Balance)

Term of the Day

Durable Goods

Durable goods are expensive items that you can expect to last for three years or more. Businesses and consumers only buy these big-ticket items when they feel confident about the economy. They put off buying durable goods until things get better when they're not sure.

By contrast, nondurable goods last less than three years on average. The Bureau of Economic Analysis (BEA) includes food, pharmaceuticals, tobacco, clothing, household supplies, personal care products, magazines, and gasoline in this category.

Off the Charts

If the economy grows too slowly or even contracts, it's not healthy. On the other hand, if it grows too rapidly, that's not ideal either. Most economists agree the ideal GDP growth rate is between 2% and 3%.