What Percent Of America’s Gdp Is Spent On Military

What Percent Of America’s Gdp Is Spent On Military – Activity at the end of last year demonstrated the resilience of American consumers and businesses in the face of inflation and rising interest rates.

Economic growth remained solid at the end of last year as a strong job market and cooling inflation allowed Americans to keep spending despite fears of a recession.

What Percent Of America’s Gdp Is Spent On Military

US gross domestic product, adjusted for inflation, increased at an annual rate of 2.9 percent in the fourth quarter of 2022, the Commerce Department said Thursday. That’s slightly down from the 3.2 percent growth rate in the third quarter. Consumer spending, the cornerstone of the US economy, grew at a rate of 2.1 percent. This is preliminary data and will be revised at least twice in the coming months.

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“The economy is moving forward,” said Michael Gapen, chief US economist for Bank of America. “There’s a lot more momentum in the economy at the end of the year than we expected, and a lot of that will come from households.”

Healthy fourth-quarter growth capped a year in which economic output contracted in the first half, fueling talk of a recession, then rebounding. During the year as a whole, as measured from the fourth quarter of the previous year, G.D.P. growing 1 percent, down sharply from 5.7 percent growth in 2021.

The seesaw pattern in 2022 was driven by large swings in trade and inventories, historically the most volatile components of GDP. The bigger picture, economists say, is simpler: Recoveries from the pandemic recession have cooled off from the frenzied pace of 2021, but remain resilient in the face of war in Europe, worldwide inflation and a string of aggressive interest rate hikes. by the Federal Reserve at home.

The initial rebound from the pandemic recession was much stronger in the United States than in most of the rest of the world. The gap widened last year as the war in Ukraine threatened to push Europe into recession and China’s strict Covid containment policies stifled growth there.

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The question now is whether the resilience of the United States can continue in 2023. Inflation remains too high by any measure, and the Fed is expected to continue raising interest rates in an attempt to control prices. Congressional battle to raise the debt ceiling could lead to further volatility in financial markets – or a crisis if lawmakers fail to reach a deal.

There are already signs of tension, particularly in the sectors most sensitive to higher borrowing costs. Construction activity and home sales have slowed significantly. Tech companies have announced tens of thousands of layoffs in recent weeks. Manufacturing output fell in November and December.

Even the stalwart consumer shopping machines may be starting to grunt: Retail sales are down for a second straight month, and Americans are increasingly turning to credit cards as pandemic-era savings dry up.

Consumer spending, while solid, was weaker in the fourth quarter than forecasters expected, which may reflect a further slowdown—or even an outright decline—in the final months of the year. Half of overall growth in the fourth quarter came from businesses building inventory, a sign that many companies may be selling less during the holiday season than expected.

U.s. Economy Grew At 2.9% Annual Rate In Fourth Quarter

But economists say a recession this year is inevitable. Inflation has started to ease in recent months, even as the unemployment rate remains low. That could allow the Fed to raise interest rates more slowly, reducing the risk of cooling the economy too far.

The chart that appeared with earlier versions of this article incorrectly stated the G.D.P. annual rate. growth for 2022. That’s 2.1 percent, not 2.9 percent.

Higher interest rates haven’t dragged down the US economy just yet. But there is one place where they are having a clear impact: housing.

The housing industry—which economists call “housing fixed investment”—contracted at an annualized rate of 26.7 percent in the fourth quarter, shedding 1.3 percentage points from overall GDP. growth. The big contraction followed a bigger decline in the third quarter, and a slightly milder pullback in the second.

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The big decline largely mirrored a sharp drop in construction activity last year, as higher interest rates slashed demand and caused builders to delay or cancel projects. Transactions also plummeted, as buyers and sellers alike struggled to adjust to the rapidly changing market.

The GDP figures do not directly account for other aspects of the housing market, such as prices — which have fallen somewhat but not decreased — or rents, which rose rapidly for most of last year.

Wall Street rose on Thursday, following new economic growth data showing the United States remained resilient to inflation and higher interest rates at the end of last year.

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The S&P 500-stock index was up and down after data showed the economy posted solid growth in the fourth quarter, before settling into a steady rally in the afternoon.

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Investors and economists have warned that the fourth-quarter gross domestic product figure will take a backseat to the latest corporate earnings report and forthcoming data on the health of the labor market. Mastercard, JetBlue and American Airlines posted financial results early Thursday that beat analyst expectations. Dow and Southwest Airlines skipped profit estimates in their latest reports.

The report’s solid GDP is widely expected and will do little to change the broader market narrative, analysts said. The data reinforces the view that the economy has held up despite rising inflation and interest rates. The question on investors’ minds is whether it continues.

“Now is crunch time,” said Luke Tilley, chief economist at the Wilmington Trust. “The economy is slowing down. Now we are looking at whether economic growth continues to slow down and consumers and businesses continue to cut back on spending, or if this is the slowdown we need and we crawl from here.”

New Orleans Harbor, one of the busiest in the state. Growth in US imports last year outpaced growth in exports. Credit… Edmund D. Fountain for The New York Times

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The US annual trade deficit in goods and services jumped 13 percent last year to $972.6 billion as Americans continued to buy record volumes of foreign products, according to data released Thursday by the Commerce Department.

A weaker global economy weighed on trade at the end of last year, data showed, as pandemic lockdowns in China and war between Russia and Ukraine dampened demand globally. One exception is the US energy sector, which has stepped in to provide more natural gas and petroleum products after Europe cut ties with Russia.

In the fourth quarter of last year, overall US exports fell 1.3 percent on an annual basis as shipments of goods worldwide fell sharply. But services exports, including travel and transportation, jumped 12.4 percent, as activity continued to recover from the pandemic.

Imports were also weaker in the quarter, down 4.6 percent, as higher interest rates discouraged Americans from buying durable consumer goods like tools and machinery. The United States continues to raise interest rates in an effort to quell persistent inflation.

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Economists and politicians have differing views on how big a trade deficit problem is. Some economists see the trade deficit as a product of a growing US economy that is more able to buy goods from abroad, but worry that a continuing trade deficit will result in reduced employment and economic growth.

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Regardless, when the Commerce Department calculates its measure of economic growth, it adds exports to national figures for public and private investment and spending, and subtracts imports. In the fourth quarter, weak goods exports weighed on gross domestic product, although imports also declined.

The trade figures are released as part of the quarterly and annual reports on economic growth. A more complete report with final trade data for the year will be published on February 7.

When the pandemic first disrupted the US economy — and economic data — in 2020, The New York Times changed the way it reported certain government statistics. Now, with the shock of the pandemic no longer producing an extraordinary economic turnaround, that’s changing again.

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On Thursday, with the Department of Commerce’s coverage of the preliminary estimate of US Gross Domestic Product for the fourth quarter of 2022, The Times again emphasized the annualized rate of change from the previous quarter, rather than a simple percentage change from one period to the next. .

In the United States, G.D.P. numbers are traditionally reported at an annual rate, meaning the number an economy will grow or shrink if quarter-to-quarter changes persist for a full year.

Annual rates make it easy to compare data collected over different periods, allowing analysts to see quickly whether growth in one quarter was faster or slower than in 2010, for example, or the 1990s as a whole.

But annual rates can also be confusing, especially during periods of rapid change. When shutdowns crippled the economy early in the pandemic, G.D.P. contracted at an annual rate of nearly 30 percent. To the non-expert, it may sound as if economic output has shrunk by almost a third, when in fact it has fallen by less than 10 percent.

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As a result, The Times decided to emphasize

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