The United States economy grew more than expected in the fourth quarter of 2022, but momentum seems to have cooled heading into the new year. Gross domestic product, the broadest measure of goods and services produced across the economy, grew by 2.9% from October to December according to the report from the Commerce Department. Experts had expected the economy to grow at smaller rate, something closer to 2.6%. All in all in the pace is still a decline from the 3.2% pace recorded in the third quarter.

“The economy is not yet finished absorbing the body blow to the economy caused by the bulk of the supersized rate hikes that the Fed imposed during the second half of the year,” said RSM chief economist Joe Brusuelas. “Despite the resilient close to a difficult year in growth, we just do not see such a happy ending to a turbulent era of American economic growth.”

In total for 2022, GDP increased 2.1% compared to 5.9% across 2021, which was the largest growth in any year since 1984. “The 2.9% annualized rise in fourth-quarter GDP was a little stronger than we had expected, but the mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on,” Capital Economics senior U.S. economist Andrew Hunter said in a note. “We still expect the lagged impact of the surge in interest rates to push the economy into a mild recession in the first half of this year.”

According to Yahoo Finance:

The Bureau of Economic Analysis attributed the rise in GDP to broad-based increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment.

Those components, however, were partly offset by declines in residential fixed investment and exports. Imports, which are a subtraction in the calculation of GDP, also decreased.

Personal consumption expenditures (PCE) — or consumer spending — which comprises roughly two-thirds of domestic activity rose at 2.1% clip, a modest slowdown from 2.3% in the prior quarter.

Some cracks in consumer activity, however, did emerge in the report. While Americans continued to spend on services, the release reflected a decrease in spending on good, primarily in food and beverages and motor vehicles.