Digging deeper into Q4 US GDP reveals a weak picture

The advance estimate for 4Q22 US GDP came in at 2.9%. While this was a moderation from the annualised growth rate of 3.2% for 3Q22, it represented an upside surprise to consensus estimates, which had forecast growth of 2.6%.

As opposed to indicating a recession is now happening, or is set to imminently occur, the headline GDP number instead suggests that the US economy is doing relatively well. A deeper dive into the GDP numbers suggests otherwise — let’s explore.

Real spending on goods turns positive but remains relatively weak

After three consecutive quarters of declines, real spending on goods rose in 4Q22, but growth remained tepid, increasing by an annualised rate of 1.1%. Breaking this down further, real durable goods spending increased by just 0.5%, following two quarters of declines.

Durable goods spending was supported by a rebound in spending on motor vehicles and parts. Real spending in the other durable goods category fell by 10.1%.

Nondurable goods spending, which rose 1.5%, w…