U.S. GDP revised down to 2.6% as consumer spending falls

March 30 (UPI) -- The latest estimate for fourth-quarter U.S. gross domestic product was revised lower to 2.6%, driven in part by a decline in consumer spending, data published Thursday show.

The Commerce Department reported that real GDP increased annually by 2.6% during the fourth quarter, a downward revision from the 2.7% forecast last month.

Private investments and consumer spending drove the bulk of the momentum during the three-month period ending in December. A downturn in consumer spending was largely a reflection of order for durable goods -- like refrigerators and jewelry -- that require long-term and heavy investments.

More recent data on durable goods orders show stubborn inflation and an end to pandemic-era stimulus is leading to bloated credit card balances as consumers struggle to keep up, while rate hikes from the Federal Reserve make the lending necessary for big financial commitments more costly.

The Commerce Department added Thursday that disposable personal income increased by 8.9% during the fourth quarter and personal savings were on the rise, though fourth-quarter data precede successive rate hikes from the U.S. Federal Reserve and concerns about a crisis in the global financial sector.

Nevertheless, confidence seems to be returning to the broader economy.

A gauge of consumer confidence from The Conference Board found a level of defiance against lingering inflationary pressures, but job prospects may be starting to fade. Federal data show first-time claims for unemployment insurance jumped by 7,000 to 198,000, after coming in more or less steady during the previous week. The less volatile, four-week moving average was revised up by 2,000.

On the broader momentum, the Atlanta Fed's GDPNow forecast points to an expansion of 3.2% for the first quarter of 2023.