Pretty difficult to argue with a robust real GDP number in the 4th quarter of 3.3% following the Q3 number of 4.9%. Increased consumer spending in both goods and services, increases in state and local government spending and nonresidential fixed investment, and increased federal government spending led the way. Gross nominal GDP for the trailing 4 quarters was just a shade under $28 Trillion. Inflation rate increases have subsided that gave a boost to real disposable personal income increasing 2.5% for the quarter. Overall real GDP for 2023 was up 2.5% after an increase of 1.9% in 2022.
Nominal was up 6.3% in 2023 after a 9.1% increase in 2022. If we review consumer balance sheets, specifically the liabilities, 66% of debt outstanding are mortgages and 90+% of those are still at the historically low rates of previous years indicating consumers are not feeling the pinch of higher interest rates. The robust nominal GDP numbers have actually caused the Debt to GDP percentage to decrease the last couple of years, even with massive annual deficits (meaning the US has more borrowing capacity).
Those concerning increased interest rates have actually provided additional income to investors in the form of higher return on cash balances.