Surpassing all expectations, the United States economy experienced remarkable growth in the fourth quarter, expanding by 3.3%. This substantial increase was largely attributed to significant improvements in government expenditure, business investment, exports, and consumer spending. Experts had initially estimated a more conservative 2.0% growth, but the actual results far exceeded their projections. The announcement of this impressive growth was made by the United States Department of Commerce on Thursday, marking an impressive milestone for the nation's Gross Domestic Product (GDP).
In comparison to the previous quarter, the GDP of the United States expanded by a noteworthy 3.3% in the fourth quarter of 2023. This also had a positive impact on the overall growth of the US economy, which is now projected to have expanded by 2.5% in 2023, surpassing the originally predicted growth rate of 1.9%. According to the LSEG consensus, experts had expected a rise of 2.0%, making the outcome even more substantial in terms of surpassing expectations.
Analysis of the GDP growth throughout the year reveals a steady upward trajectory. The first quarter witnessed a 2.0% increase, followed by a slightly higher 2.1% increase in the second quarter, and a significant surge of 4.9% in the third quarter. It is worth noting that increases in government expenditure at various levels, including federal, state, and regional, alongside surges in exports, played a pivotal role in driving this substantial growth in the fourth quarter. The result was a staggering $27.94 trillion in total, representing a 4.8% rise amounting to $328.7 billion. Moreover, the third quarter witnessed a remarkable 8.3% increase, translating to $547.1 billion in GDP growth.
Additionally, the personal consumption expenditure and income of Americans played a crucial role in facilitating the overall economic growth. Following a 6.5% climb in 2022, the consumer price index (PCE) was projected to have risen by 3.7% in the previous year. However, after excluding energy and food costs, the core PCE increased by 4.1%, falling short of the expected 5.2% rise. The primary drivers behind the $224.8 billion surge in personal income among Americans in the fourth quarter were increased compensation, personal income from assets, and homeowner income, following a gain of $196.2 billion in the third quarter. Furthermore, disposable personal income also rose significantly, climbing by $143.5 billion, or a 2.9% increase, after a 4.2% gain of $211.7 billion in the third quarter. In a comparable analysis, real discretionary income experienced a growth of 2.5%, while nominal income only rose by 0.3%.
As individuals witnessed their incomes increase, their savings patterns also saw some fluctuation. In the fourth quarter, the amount saved by individuals totaled $818.9 billion, which represented a slight decrease from the previous quarter's $851.2 billion. Meanwhile, the personal savings rate, measured as a proportion of disposable income, stood at 4.0% in the fourth quarter, down slightly from 4.2% in the third quarter.
Overall, the United States economy demonstrated remarkable resilience and growth in the fourth quarter of 2023. The unexpected expansion by 3.3% surpassed all predictions, with various factors including government expenditures, business investments, exports, and consumer spending contributing to this impressive growth. As the nation moves forward, it is expected that the positive momentum will continue, fostering an environment of increased economic prosperity and development.