U.S. Economy Grew at 2.9% Annual Rate in Fourth Quarter

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“Resilience is a good thing in many ways, but it’s also something that makes things harder for the Federal Reserve and it hardens their resolve,” said Diane Swonk, chief economist at KPMG, the accounting firm.

There are some hints that consumers may at last be reaching their limits. Americans have been saving less and using credit cards more in recent months as pandemic-era savings dry up. Retail sales have fallen for two straight months, and a big buildup of inventories in the fourth quarter suggests that many businesses may have sold less during the holiday season than they expected.

“You can start to see the cracks here,” said Brett Ryan, senior economist at Deutsche Bank.

In some corners of the economy, those cracks are more like fissures. Housing, in particular, has been battered by rapidly rising interest rates. Residential construction activity contracted at an annual rate of 26.7 percent in the fourth quarter, capping its worst year since the subprime-mortgage crisis 15 years ago. It was a striking reversal from earlier in the pandemic, when home building was booming.

“It was such an abrupt thing — I think that’s what had everyone’s head spinning,” said Gene Myers, chairman of Thrive Home Builders in Denver. “I think there’s kind of a whiplash.”

Mr. Myers had expected to close sales of about 150 houses last year. He ended up closing 83. “Our demand just dried up,” he said.

So in November, Mr. Myers took action, laying off workers, negotiating lower prices with contractors and slashing the price of homes by about 15 percent. There are signs the strategy worked: Thrive has sold eight homes so far this year, which Mr. Myers considers a sign that buyers are holding out for the right price, not giving up on homeownership altogether.

“I feel like people are going to wake up after the holidays and say: ‘The sky didn’t fall, I’m still employed and I’m sick of renting. Let’s take a look,’” he said.