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United States GDP Expanded in Fourth Quarter by 3.4%

US GDP grows 3.4% in Q4 2023, with consumer spending and investment up. Dollar steady, stocks unmoved. Canada's GDP rebounds, hinting at solid 2024 start.

US GDP rises 3.4%, Canada GDP rebounds; US dollar steady, while stock markets show little movement following the announcement.

United States GDP for fourth quarter 2023, released earlier today, indicated that the economy expanded at an annualized rate of 3.4%. This was the third and final estimate of GDP and was revised upwards from the 3.2% gain in the second estimate, according to the Bureau of Economic Analysis (BEA).

The final estimate of GDP is based on additional data that was not available for the second estimate which was released in February. The BEA noted that the final estimate reflected upward revisions to consumer spending and nonresidential fixed investment. and imports. This was partly offset by a downward revision to private inventory investment.

Current-dollar GDP increased by $230.2 in the fourth quarter year-on-year to $27.96 trillion, an upward revision of $12.4 billion from the previous estimate.

The GDP growth of 3.4% was more than respectable but was significantly lower than the third-quarter growth of 4.9%. The US economy, although strong, has cooled down due to high interest rates which have dampened economic activity. The Federal Reserve is yet to signal rate cuts are coming and Fed policy makers have sounded hawkish recently, saying that the Fed is in no rush to lower rates as long as inflation remains well above the 2% target.  

Canada’s Economy Bounces Back 

Canada’s GDP rebounded in January with a gain of 0.6% month-on-month, compared to -0.1% in December. This beat the market estimate of 0.4%. The growth was broad-based, as 18 of 20 sectors showed an increase in January compared to the previous month. The manufacturing sector, which has struggled, fully recovered from the 0.9% decline in December.

The preliminary estimate for February GDP stands at 0.4% month-to-month, which indicates that the economy has started 2024 with solid growth after a weak gain of only 0.2% in the fourth quarter of 2023.

The Bank of Canada (BoC) meets next on April 10 and its rate decisions are driven by key data, including GDP. The BoC has held interest rates at 5.0% since July 2023 and is looking for growth to cool before it lowers rates. With Canada’s economy showing signs of strength so far in 2024, we could see the central bank continue to stay on the sidelines and keep rates unchanged over the next few months.

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    Market Reaction – US Dollar Steady, Stock Markets Shrug 

    The USD/CAD currency pair climbed higher earlier in the day, but the strong Canadian GDP enabled the Canadian dollar to recoup all of these losses. In the European session, USD/CAD is almost unchanged at 1.3596.

    The EUR/USD currency pair the GBP/USD currency pair are almost unchanged today but the US dollar has made inroads against the Australian dollar, as the AUD/USD currency pair is down 0.41%.

    In the US, the major stock indices barely reacted to today’s US GDP report.

    The S&P 500 Index is up only 3.66 points (0.070%) at 5,252.94, while the Nasdaq 100 Index has risen 10.75 points (0.059%) at 18,292.65.

    In Canada, the S&P/TSX Composite Index has edged higher, gaining 70.93 points (0.32%) at 22,180.59.

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    Kenny Fisher
    About Kenny Fisher
    Kenny started his career in forex working in the sales and marketing department at a major forex broker and has worked as a market analyst for 12 years. With a legal editing background, Kenny has combined his writing skills and finance expertise to produce top-quality articles. Kenny covers a wide range of topics, including global stock markets, commodities and currencies, with focus on fundamental and macro-economic analysis. Kenny’s articles have been carried by Oanda,, Seeking Alpha and FXStreet. Kenny holds a Bachelor of Law from Ogoode Hall Law School in Toronto, Canada.

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