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(WASHINGTON) — Investors, business leaders and everyday Americans will be keeping a close watch on the release of gross domestic product data on Thursday, as inflation eases but recession fears still loom.
The data for the final three months of 2022 will show whether the economy continued to expand or reverted back to the contraction experienced over the first half of last year.
Forecasters expect that the U.S. economy will have grown by a 2.8% annualized rate. If the report is in line with expectations, it would mark a slowdown from 3.2% growth in the previous quarter but would show that the economy averted a downturn.
The data will reveal how the economy fared amid an aggressive series of interest rate hikes imposed last year by the Federal Reserve.
The rate hikes aim to slow price increases by cooling the economy and choking off demand. The approach, however, risks tipping the U.S. into a recession and putting millions out of work.
The gross domestic product data arrives days before the Federal Reserve decides whether to impose another interest rate hike, its first opportunity to do so this year. Last month, the Fed raised its short-term borrowing rate 0.5%, slowing the pace from previous rate hikes.
Economic activity shrank a combined 2.2% over the first six months of last year, marking two consecutive quarters of negative GDP, which many consider shorthand for identifying a downturn as a recession.
The National Bureau of Economic Research, a research organization seen as the formal authority for identifying recessions, uses a more complicated definition that takes into account an array of factors. It did not declare a recession last year.
The labor market has proven resilient. Hiring remained strong last month as employers added 233,000 jobs and wages grew a robust 4.6% compared to a year earlier.
Meanwhile, inflation has softened. Consumer prices rose 6.5% last month compared to a year ago, extending a months-long slowdown of price hikes after reaching a 40-year high in June.
Still, most economists expect a recession later this year, as interest rate hikes weigh on the economy, according to a survey released by Bloomberg last week. Forecasters expect gross domestic product to fall over the second and third quarters of this year, the survey found.
Despite the robust job market, growing evidence suggests the Fed’s rate hikes have put the brakes on some economic activity.
Home sales fell for the 11th consecutive month in November, reaching their lowest rate since November 2010, according to the National Association of Realtors.
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