The table below shows how changes in the four components of GDP (personal consumption, investment, government spending and net exports) contributed to the change in quarterly U.S. economic growth since 2022. Personal consumption is split between consumption of goods and consumption of services. Investment is split between fixed investment (residential and nonresidential) and inventories. 2022 was a mixed year for U.S. economic growth, with negative growth in the first two quarters of the year and positive growth in the last two quarters. The first quarter negative growth was unusual, as both personal consumption and investment increased but an abnormal surge in imports drove the economic decline. The surge in imports was due to multiple factors, including a U.S. economy that recovered more robustly than foreign economies, and scaling up of imported goods by business to avoid supply uncertainties created by the Russian invasion of Ukraine and any recurring COVID shutdown by China. A significant drop in investment spending, both residential investment and inventories, was the primary factor causing the drop in second quarter growth. The abnormal first quarter surge of imports was reversed in the third quarter, which combined with increased personal consumption to return positive economic growth. Economic growth continued but slowed in the fourth quarter, led by increases in both personal consumption and investment spending. Economic growth slowed further in the first quarter of 2023, to only 1.1%. Consumer spending once again was the primary driver of the increase, but investment spending declined sharply led by a significant drop in inventories.
Contributions to Percent Change in Real Gross Domestic Product– Annualized Rate (Source: Bureau of Economic Analysis) 2022 Q1 2022 Q2 2022 Q3 2022 Q4
2023 Q1
GDP
-1.6 0.91 -0.02 0.93 0.98 0.83 0.98 -0.15 0.15 -0.40 -3.13
-0.6 1.38 -0.61 1.99 -2.83 -0.92 0.01 -0.93 -1.91 -0.29 1.16
3.2
2.6
1.1
Personal Consumption
1.54 -0.08 1.63 -1.80 -0.62 0.80 -1.42 -1.19 0.65 2.86
0.70 -0.01 0.72 0.79 -0.68 0.52 -1.20 1.47 0.65 0.42
2.48 1.45 1.03 -2.34 -0.07 0.10 -0.17 -2.26 0.81 0.11
Goods
Services
Investment
Fixed Investment
Nonresidential Investment Residential Investment
Inventories
Government Spending
Net Exports
Despite rising interest rates in 2022 and 2023, personal consumption remained strong, positively contributing to GDP growth in every quarter. In 2022, personal consumption generally shifted toward services rather than goods, as consumption of goods declined in every quarter while consumption of services increased. That changed in the first quarter of 2023, which saw increases in both the consumption of goods (led by motor vehicles and parts) and services. Since the first quarter of 2022, non-residential investment has increased slightly in each quarter, but residential investment declined. Growing economic uncertainty contributed to ups and downs in inventory spending, with the first quarter 2023 decline led by decreases in inventory investment in both wholesale trade and manufacturing.
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Center for Business and Economic Insight
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