Revised GDP Tells Story of Strong U.S. Economy in 2023, with Personal Income and Consumer Spending Driving Growth

The U.S. economy saw an upward revision in the fourth quarter of 2023, with gross domestic product (GDP) revised to an annual rate of 3.4%, reflecting an increase in real GDP of 3.2%. This update was driven by several factors, including increases in consumer spending, government spending, exports and fixed investment.

One key driver of this growth was an increase in personal income, which rose $230.2 billion in the fourth quarter alone. Personal savings also increased, rising $6.3 billion to $815.5 billion, with the savings rate reaching a high of 4%.

Looking at the broader economy for 2023 as a whole, the Bureau of Economic Analysis (BEA) reported that real gross output rose 2.1%, with private goods-producing industries growing at a slightly slower pace than private service-producing industries (which grew by 2.1%). State production also increased by 2.2%. Prices also rose during this time period, with the gross domestic purchases price index rising by 1.9% and personal consumption expenditures by 1.8%.

The PCE index (excluding food and energy) also showed positive trends for the year as a whole, rising by a solid 2%. This reflects overall positive trends in the U.S economy for the fourth quarter of 2023