ESCALATING, DIANE . >> ALL RIGHT, TOM SOUFI BURRIDGE FROM KRAMATORSK, UKRAINE, THANK YOU. AND THE U.S. ECONOMY IS STILL GROWING STRONG DESPITE THE FEDERAL RESERVE'S INTEREST RATE HIKES TO FIGHT INFLATION. THE COMMERCE DEPARTMENT REPORTS THE NATION'S GROSS DOMESTIC PRODUCT, OR GDP, GREW AT A RATE OF TWO POINT NINE PERCENT IN THE FOURTH QUARTER. ABC NEWS REPORTER ALEXIS CHRISTOFOROUS JOINS ME LIVE NOW. ALEXIS , GDP IS LARGELY CONSIDERED THE REPORT CARD OF THE ECONOMY. THIS IS A BIG ONE . SO WHAT DOES THIS TELL YOU? AND THAT'S A GOOD WAY TO DESCRIBE IT. THIS IS A LOOK AT A SORT OF THE REPORT OF THE ECONOMY, AND IT SHOWS US THAT THE ECONOMY DID PRETTY WELL TO END TWENTY , TWENTY TWO , DESPITE THE HIGHEST INFLATION IN 40 YEARS. AND RISING INTEREST RATES, THE ECONOMY STILL GREW AT A SOLID PACE, TWO POINT NINE PERCENT, SLIGHTLY BETTER THAN WE EXPECTED. DOWN A LITTLE BIT FROM THE PACE OF GROWTH WE SAW IN THE PRIOR QUARTER. WHICH WAS THREE POINT TWO PERCENT. SPECIFICALLY, WE SAW CONSUMER SPENDING ON GOODS AND SERVICES RISE A BIT. ALSO, FEDERAL GOVERNMENT SPENDING, STATE AND LOCAL GOVERNMENT SPENDING AS WELL. THAT WAS OFFSET, THOUGH, BY A DROP IN SPENDING FOR HOUSING. WE KNOW THE HOUSING MARKET HAS DROPPED SIGNIFICANTLY AS INTEREST RATES CONTINUE TO RISE. THERE WAS ALSO A DROP IN EXPORTS, BUT I THINK THE BIG TAKEAWAY HERE IS THAT THIS REPORT GIVES US SOME HOPE THAT MAYBE WE CAN ACHIEVE THAT SOFT LANDING. WE KEEP TALKING ABOUT THAT THE FEDERAL RESERVE WILL BE ABLE TO KEEP RAISING INTEREST RATES TO SLOW THE ECONOMY ENOUGH TO BRING PRICES DOWN, BUT NOT SO MUCH THAT IT PUSHES US INTO RECESSION. NOW, THE PAST FEW DAYS, YOU AND I HAVE TALKED ABOUT SOME MASS LAYOFFS GOING ON . >> WE ALSO REPORTED ON RETAIL SALES BEING DOWN LAST WEEK. SO HOW DOES THAT ALL FACTOR INTO, YOU KNOW, I THINK THE KEY TO WHETHER OR NOT WE FALL INTO A RECESSION REALLY LIES WITH THE CONSUMER, BECAUSE WHEN YOU THINK ABOUT IT, SPENDING IS THE ENGINE OF OUR ECONOMY. IT MAKES UP 70% OF ECONOMIC GROWTH. WE SAW CONSUMERS PULL BACK A LITTLE BIT IN DECEMBER AND SHIFT THEIR SPENDING. THEY SPENT LESS ON THINGS LIKE ELECTRONICS AND FURNITURE AND SPENT MORE ON THINGS LIKE SERVICES, LIKE TRAVEL AND DINING OUT. BUT STILL, CONSUMERS ARE SPENDING AT A PRETTY SOLID PACE DESPITE ALL OF THE CHALLENGES. IF THEY CAN HANG IN THERE AND CONTINUE TO DO THAT, THEY MAY BE THE SAVING GRACE TO PREVENT THIS ECONOMY FROM FALLING INTO A RECESSION. >> NOW, WHAT DOES THIS SAY ABOUT HOW EFFECTIVE THOSE INTEREST RATE HIKES HAVE BEEN? AND DOES THIS HELP PREDICT WHAT MIGHT BE ON THE HORIZON? YES, RIGHT. WE WERE IN THE BUSINESS OF PREDICTING NEXT WEEK. COME ON , WE GET A FEDERAL RESERVE MEETING NEXT WEEK. MOST EXPECT THE FED TO RAISE RATES BY ANOTHER QUARTER POINT. SO WE'RE STARTING TO SEE THE FED BECOME LESS AGGRESSIVE BECAUSE WE'RE STARTING TO SEE THE STRING OF INTEREST RATE HIKES SO FAR FINALLY START TO TAKE EFFECT. THOSE INTEREST RATES HAVE A LAGGING IMPACT ON THE ECONOMY. IF YOU LOOK AT THE REPORTS AS OF LATE, INFLATION STILL HIGH, BUT STARTING TO COME DOWN AND RETAIL SPENDING STARTING TO PULL BACK A LITTLE BIT. SO THEY'RE STARTING TO HAVE THE INTENDED CONSEQUENCES THAT THE FED WANTS, INCLUDING THE JOB MARKET. LIKE YOU SAID, YOU AND I TALKING ABOUT THOUSANDS OF LAYOFFS, MOSTLY IN THE TECH SECTOR. THE QUESTION REMAINS, CAN THE JOB MARKET PULLBACK AND CONSUMERS PULL BACK ? CAN ALL THAT HAPPEN WITHOUT PUSHING THE ECONOMY? INTO A DEEP RECESSION? SOME ECONOMISTS ARE SAYING WE MIGHT HAVE WHAT'S CALLED A ROLLING RECESSION, DIANE , AND THAT IS NOT A RECESSION ACROSS THE BOARD. BUT ONE SPECIFIC SECTORS LIKE THE HOUSING MARKET ALREADY IN A RECESSION. WILL THE MANUFACTURING SECTOR GO INTO A RECESSION? AND SOMETHING LIKE THAT