GDP Accounts Show Slippage in Corporate Profits in Q4-2022

Source: Economics Group of Wells Fargo Bank, N.A.Summary

  • The third estimate of real GDP growth in Q4-2022 showed the U.S. economy expanded at an annualized rate of 2.6%, little changed from the second estimate of 2.7% that was released a month ago.
  • However, the reported real GDP growth rate overstates the strength of the economy at the end of last year. Real consumer spending grew only 1.0%, and an inventory build boosted topline GDP growth by 1.5 percentage points.
  • Today’s release provided the first look at the income side of the National Income and Product Accounts (NIPA). Real gross domestic income, which in theory should be equal to real GDP but in reality is usually not, fell 1.1% at an annualized rate. Real disposable income, which is a measure of consumer purchasing power, was down 1.4% on a year-over-year basis in Q4-2022.