US economy slowed but still grew at 2.9% rate last quarter.

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The U.S. economy expanded at a 2.9% annual pace from October through December, ending 2022 with momentum despite the pressure of high interest rates and widespread fears of a looming recession.

Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of economic output — decelerated last quarter from the 3.2% annual growth rate it had posted from July through September. Most economists think the economy will slow further in the current quarter and slide into at least a mild recession by midyear.

The housing market, which is especially vulnerable to higher loan rates, has already been badly bruised: Sales of existing homes have dropped for 11 straight months.

And consumer spending, which fuels roughly 70% of the entire economy, is likely to soften in the months ahead, along with the still-resilient job market.

The economy’s expected slowdown is an intended consequence of the Federal Reserve’s aggressive series of rate hikes. The Fed’s hikes are meant to reduce growth, cool spending and crush the worst inflation bout in four decades. Last year, the Fed raised its benchmark rate seven times. It is set to do so again next week, though this time by a smaller amount.

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