Strong US consumer spending prompts upward revision to Q4 GDP

Revisions to fourth-quarter GDP figures showed that the US economy grew at a faster-than-expected rate at the end of 2023, according to data out on Thursday from the Bureau of Economic Analysis.

US GDP expanded at an annual rate of 3.4% in the fourth quarter, following the 4.9% year-on-year growth seen in the third quarter.

This was revised up from an earlier estimate of 3.2% and ahead of the consensus forecast for no change from the initial reading.

The upward revisions were a result of higher-than-expected consumer spending and non-residential fixed investment that were partly offset by a downward revision to private inventory investment.

Economist Ryan Sweet from Oxford Economics said there was "plenty to like" from Thursday's release, even if it doesn't change short-term projections for the economy much.

"The new data don’t significantly alter our near-term outlook for the economy [...] as GDP is backward looking. Also, the policy implications are minimal and we’re still leaning toward pushing our expected timing of the first rate cut to June from May."