The US economy grew at a 2.9% annual rate in the fourth quarter

“The recession is a good thing in many ways, but it makes things harder for the Federal Reserve and it makes their determination harder,” said Diane Swank, chief economist at accounting firm KPMG.

There are some indications that consumers may finally be reaching their limits. Americans have been saving less and using credit cards in recent months as pandemic savings have dried up. Retail sales are down For two consecutive months, and a large build-up of inventory in the fourth quarter, suggests many businesses may have sold less than they expected during the holiday season.

“You can start to see the cracks here,” said Brett Ryan, senior economist at Deutsche Bank.

In some corners of the economy, those cracks are like fissures. Housing, in particular, has been hit hard by rapidly rising interest rates. Residential construction activity shrank 26.7 percent at an annual rate in the fourth quarter, marking its worst year since the subprime-mortgage crisis 15 years ago. This was a marked change from the pre-pandemic period, when homebuilding was booming.

“It was a sudden thing — I think that’s what made everybody’s head spin,” said Gene Myers, president of Thrive Home Builders in Denver. “I think there was a kind of whiplash.”

Mr. Myers had expected to close about 150 home sales last year. He finished 83. “Our demand has dried up,” he said.

So in November, Mr. Myers took action, laying off workers, negotiating lower prices with contractors and reducing housing prices by about 15 percent. There are signs that the strategy has worked: Thrive has sold eight homes so far this year, which it sees as a sign that buyers aren’t giving up on homeownership altogether and are getting the right price.

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“I can feel people waking up after the holidays and saying, ‘The sky isn’t falling, I’m still at work, I’m sick of rent. Let’s see,'” he said.

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