U.S. economy: The economy grew at a much stronger than expected pace during 2023, defying expectations of a recession. (According to economists surveyed by the Wall Street Journal in January 2023, the likelihood of recession in 2023 was around 65%). The year ended on a strong note, with Q4 Real GDP growing at 3.3%, well above the consensus forecast.¹ This growth was mainly driven by strong consumption spending, which grew at a 2.8% annualized growth rate in Q4 and contributed 1.9% to the overall growth. Government spending increased 3.3% over the quarter and contributed 0.6% to overall Q4 growth and private investment increased 2.1% and contributed 0.4% to the Q4 growth (Exhibit). While residential investment grew at an annualized rate of 1.1% over the quarter, its contribution to the overall growth was negligible at 0.04%. Real GDP increased 2.5% for the full year 2023, up from a 1.9% increase in 2022.

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