US economy progress.

 The US eco­nomy pos­ted bet­ter than expec­ted growth in the final quarter of 2022, even as the Fed's

rate rises star­ted to weigh heav­ily on busi­ness activ­ity. That marked a slow­down from 3.2 per cent growth in the third quarter, reflect­ing the steps the US cent­ral bank has taken to damp demand. The Fed is now pre­par­ing to deliver a quarter-point rate rise, from the cur­rent range of 4.25 per cent to 4.5 per cent, next week as it weighs how much higher to go now that infla­tion appears to have peaked. Offi­cials broadly back the fed­eral funds' rate hit­ting 5 per cent, and for that level to be main­tained at least to the end of the year, sug­gest­ing fur­ther rises to come bey­ond the Feb­ru­ary decision.

The gross domestic product data are the latest sign the eco­nomy has proved more resi­li­ent than expec­ted in the face of sub­stan­tially higher bor­row­ing costs while also show­ing the Fed's actions are begin­ning to have a more not­able effect. «Look­ing at the head­line, it's all look­ing good. But, look­ing under the hood, it's just those troub­ling signs and a loss of momentum that we've been see­ing really in broad swaths of the data,» said James Knight­ley, chief inter­na­tional eco­nom­ist at ING. The fourth-quarter increase was fuelled in part by busi­nesses amass­ing invent­or­ies, espe­cially across the man­u­fac­tur­ing and util­it­ies sec­tors.

Con­sumer spend­ing, one of the main drivers of the US eco­nomy, was also steady, increas­ing 2.1 per cent. In a fur­ther sign of weak­ness, fixed invest­ment sank 6.7 per cent, with hous­ing-related invest­ment con­tract­ing 26.7 per cent on an annu­al­ised basis. Busi­ness invest­ment rose just 0.7 per cent. From the fourth quarter of 2021 to the fourth quarter of 2022, real GDP increased by 1 per cent, com­pared with 5.7 per cent in the same period a year earlier.

While the over­all labour mar­ket remains robust, with the unem­ploy­ment rate hov­er­ing at a multi-dec­ade low of 3.5 per cent, there are con­cerns about the out­look for the eco­nomy. «We could see a third con­sec­ut­ive of neg­at­ive growth».

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