WASHINGTON: The US economy grew slightly less than reported in the final three months last year, the Commerce Department said Thursday, citing a downward revision to consumer spending.

GDP growth in the October to December period was 2.7 percent, annualized, lower than the 2.9 percent increase originally reported.

“The updated estimates primarily reflected a downward revision to consumer spending that was partly offset by an upward revision to nonresidential fixed investment,” said the Commerce Department in a statement.

GDP growth for 2022 remains unchanged at 2.1 percent.

The adjustment comes as the Federal Reserve’s aggressive efforts to cool demand and lower inflation ripple through the world’s biggest economy, leading to a slump in the housing sector and hitting consumer spending.

But overall, the labor market and consumption has generally held up, fueling hopes of a “soft landing” for the economy where inflation comes down without a major downturn.

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In the fourth quarter last year, economic growth reflected increases in areas like private inventory investment, led by manufacturing, as well as consumer spending, said the Commerce Department.

But among consumer spending, there was a shift from spending on goods to services.

The pick-ups were also partly offset by decreases in residential fixed investment and exports, the department added.

The deceleration in GDP in the final months last year mainly reflected a downturn in exports and slowing in consumer spending, among other areas, the Commerce Department said.

In the third quarter of 2022, GDP rose 3.2 percent.

Analysts expect the pace of expansion to also slow in the first few months of 2023, in welcome news to the Fed.

“However, even as growth slows, a focus on lowering elevated inflation means rates will move up further and will remain higher for longer,” said Rubeela Farooqi, chief US economist at High Frequency Economics.