U.S. economy posts strong growth in fourth quarter

STORY: The U.S. economy continued to grow at decent clip in the final stretch of 2022 fueled by robust consumer spending, despite fears of a possible recession, persistent inflation, and rising interest rates.

The U.S. Commerce Department on Thursday showed that gross domestic product, or GDP, grew at an annualized rate of 2.9 percent in the fourth quarter. That's down slightly from the 3.2 percent growth in Q3, but still beating expectations.

The persistent economic growth comes despite a series of aggressive interest rate hikes - the fastest since the 1980s - by the Federal Reserve aimed at dampening demand to rein in rising prices.

Rising borrowing costs could begin to bite in 2023 as consumers - the number one driver of U.S. growth - begin to pare back spending.

Retail sales have weakened sharply over the last two months. While the labor market remains strong, business sentiment continues to sour, which could eventually hurt hiring.

But Thursday's GDP numbers show economic resilience: growth in the second half of 2022 erased the 1.1% contraction in the first six months of the year.

Most economists expect a recession by the second half of this year, though a mild one compared to previous downturns, because of extraordinary labor market strength.

Underscoring that strength: A separate report showed weekly jobless claims dipped by 6,000, which suggests a continued tight labor market.