The U.S. economy expanded at a 3.3% annualized pace in the final quarter of 2023, the Commerce Department said on Thursday.

Why it matters: It's much stronger growth than economists expected and caps a year of economic resilience as the nation avoided a projected recession.

• The economy moderated in the September-December period compared to the previous quarter's 4.9% growth, which got a notable boost from companies building up inventories.

The big picture: Economic growth has been underpinned by booming consumer spending that continued even as prices for many items remain steep and interest rates rose.

• That dynamic continued in the fourth quarter, which saw consumer spending boom: rising at a 2.8% annual rate, only slightly easing from the 3.1% in the previous quarter.

Details: The strong inventory build-up that pushed up growth in the third quarter slowed in the most recent data.

• Meanwhile, fixed investment — spending on factories, equipment and more — rose 1.9%, up slightly from the 1.4% in the third quarter.
• Housing activity, meanwhile, slowed from the prior quarter's rapid pace: 1.1% in the fourth quarter, compared to 6.7% in the third quarter.

The bottom line: The strong data shows the U.S. economy was solid in 2023 even as aggressive interest rate hikes by the Federal Reserve still rippled through the economy.

• That happened alongside cooling inflation — defying doomsayers who suggested a downturn was all but necessary to crush price pressures.

Editor's note: This is a breaking news story. Check back for updates.