Strong US Economy Finishes 2022 With Impressive 3.4% GDP Growth and Record Corporate Profits

In the fourth quarter, the US economy experienced a 3.4 percent GDP growth, surpassing expectations of 3.2 percent but falling short of the substantial 4.9 percent growth seen in the third quarter, according to the Commerce Department. Additionally, adjusted profit after taxes hit a record $2.8 trillion, increasing by 3.9 percent and beating expectations for a 3.3 percent rise.

Economist Lidia Boussour of EI noted in her analysis that corporate profits jumped in the fourth quarter, reaching an all-time high. Pre-tax profits posted significant growth since the second quarter of 2022, rising by $133 billion. Profit margins widened for the second straight quarter, climbing 0.3 percentage points to 12.2 percent of GDP as increased productivity balanced out unit labor costs.

Inflation fell to 2 percent in the fourth quarter based on the “core” PCE price index, which excludes food and energy prices – this is the Federal Reserve’s preferred measure of inflation. New monthly core PCE data, which indicated a 2.8 percent increase from the same period last year in January, is due on Friday.

Market analysts were pleased with the latest GDP data, with Michelle Cluver, head of ETF portfolios at Global X, highlighting the continued resilience of the US economy