Economy

US economy ended 2023 on high note as GDP, disposable incomes grew

The U.S. economy continued to grow at a significant rate at the end of 2023 despite high interest rates.

US economy ended 2023 on high note as GDP, disposable incomes grew
Matt Slocum/AP
SMS

The U.S. real gross domestic product grew at an annual rate of 3.3% in the final quarter of 2023, marking a sixth-straight quarter of growth for the U.S. economy. 

The rate of growth was smaller than in the third quarter of 2023, when the GDP grew 4.9%.

The economy's growth was not foreseen by many at the start of the year as many experts predicted the economy would enter into a recession driven by inflation and high interest rates. Despite interest rates being at their highest levels in 22 years to close out 2023, the U.S. economy managed to grow. 

Generally, periods of high interest rates tend to cool economic growth.

Following the interest rate hikes of 2000, the U.S. reported a mild recession in 2001. When interest rates went up again in 2008, it was followed by a major recession in 2009. 

The Bureau of Economic Analysis said consumer spending, exports, state and local government spending, nonresidential fixed investment, federal government spending, private inventory investment, and residential fixed investment helped drive the growing economy. 

The report noted a 4.2% increase in disposable income in the U.S. economy for the 12-month period ending in the last quarter of 2023. During the year, per capita income grew from $57,386 at the end of 2022 to $61,084 at the end of 2023. 

2023 was a particularly good year for investors, who enjoyed seeing the S&P 500 increase 24% during the year.