• United States Gross Domestic Product is forecast to grow at an annualized rate of 2% in Q4.
• The resilience of the US economy could allow the Fed to delay the policy pivot. 
• Investors will also pay close attention to the Gross Domestic Price Deflator reading.

The Gross Domestic Product (GDP) report for the fourth quarter, to be released by the Bureau of Economic Analysis (BEA) on Thursday, is forecast to show an expansion of the US economy at an annualized rate of 2% following the impressive 4.9% growth recorded in the previous quarter.

After staying under persistent bearish pressure in the last quarter of 2023, the US Dollar (USD) managed to stage a rebound in January. The DXY USD Index is up nearly 2% since the beginning of the year, with markets reassessing the timing of the Federal Reserve (Fed) policy pivot.

US Gross Domestic Product forecast: What numbers could tell us

Thursday's US economic docket highlights the release of the preliminary GDP print for the fourth quarter, scheduled at 13:30 GMT. The first estimate is expected to show that the world's largest economy grew by 2% in the last three months of 2023, a relatively healthy pace despite being much lower than the third quarter’s 4.9% expansion. 

Inventory accumulation was the primary driver behind the GDP growth in the third quarter. As this component tends to move in the opposite direction from quarter to quarter, it will not be a major surprise to see a steep decline in the expansion rate toward the end of 2023.  

Market participants will also pay close attention to the GDP Price Deflator reading, also known as the GDP Price Index, which measures the changes in the prices of services and goods produced in the US. The GDP Price Deflator climbed to 3.3% in Q3 from 1.7% in Q2, suggesting that inflation had a bigger positive impact on growth than in the second quarter. 

Previewing the US GDP growth data, “In terms of economic output, we expect real GDP to have registered a below-trend 1.6% q/q AR expansion in 23Q4, much slower than Q3's blockbuster and unsustainable 4.9% increase,” TD Securities analysts said and continued:

“In the details, we look for consumer spending to have led the deceleration in activity (though likely growing at a still decent pace), while inventories are expected to be a major drag. We also forecast business investment to stay downbeat, as capex appears to have remained mostly impaired in Q4 (equipment investment has contracted in five out of the last six quarters). Even if our below-consensus projection is realized, output likely still rose at a very strong 2.4% pace in 2023 (2.7% Q4/Q4