NAM: Consumer Spending Fuels Economic Growth In Q4 2023 Real GDP rose 3.3 percent at the annual rate in Q4 2023, slowing from 4.9 percent growth in Q3 but stronger than expected, according to Chad Moutray, Ph.D. and Chief Economist at the National Association of Manufactur- ers (NAM). The U.S. economy continued to show signs of strength and resilience despite ongoing challenges and worries about the outlook, and consumer spending buoyed economic growth in the fourth quarter. The U.S. economy grew by 2.5 percent in 2023, up from 1.9 percent in 2022. The forecast is for 2.0 percent growth in 2024. Even as the probability of a “soft landing” has increased, there continues to be sizable downside risks in the economic outlook.
Personal consumption expenditures jumped 0.7 per- cent in December. Over the past 12 months, durable and nondurable goods spending increased 6.1 percent and 4.5 perecent, respectively, with service-sector purchasing in- creasing 6.3 percent year-over-year. Meanwhile, personal income increased 0.3 percent in December. Over the past 12 months, total wages and salaries have increased 6.8 percent, with manufacturing wages and salaries rising 5.9 percent year-over-year. New durable goods orders were essentially flat in De- cember but increased 0.6 percent to a new record high with transportation equipment excluded. Overall, new du- rable goods orders have risen 4.8 percent over the past 12 months, or 2.3 percent year-over-year with transportation equipment excluded. Indeed, orders for core capital goods—a proxy for cap- ital spending in the U.S. economy—rose 0.3 percent to a
record $74.33 billion. Core capital goods or- ders have risen 1.4 percent year-over-year. The S&P Global Flash U.S. Manufac- turing PMI rose from 47.9 in December to 50.3 in January, starting the new year off on a positive note. It was the first expansion since April 2023, buoyed by growth in new orders, which grew at the fastest pace since May 2022. Manufacturers remained upbeat in their expectations for future output, with that measure rising to the highest point since April 2022. In contrast, manufacturing surveys from the Kansas City and Richmond Federal Re- serve Banks mirrored other regional reports showing continued weakness in the sector, but with a more positive outlook for the next six months. California created the most net new manufacturing jobs in December, adding 2,600 workers, while Texas had the great- est growth in manufacturing employment over the past 12 months, up 24,100. Mary- land and North Dakota had the lowest un- employment rate nationally at 1.9 percent. After falling in both October and Novem- ber, new single-family home sales jumped 8.0 percent in December, rising to 664,000 units. The average 30-year fixed-rate mort- gage has trended lower over the past few months, helping to fuel additional demand. The PCE deflator increased 0.2 percent in December, and it has risen 2.6 percent over the past 12 months, the same pace as in November and remaining the lowest since February 2021. Excluding food and energy, core PCE inflation was 2.9 percent year-over-year in December, down from 3.2 percent in November and the weakest pace since March 2021.
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10 February 5, 2024
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