The US economy expanded at an annual rate of 2.4% in the final quarter of 2024, buoyed by a surge in consumer spending towards the end of the year, according to a government report released on Thursday.
This marks a slight upward revision from the previous estimate of fourth-quarter growth.
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However, uncertainty remains regarding the country’s ability to maintain steady growth, as President Donald Trump pursues trade wars, undertakes mass dismissals in the federal workforce, and vows to deport undocumented immigrant workers.
The Commerce Department reported that the gross domestic product (GDP) — the total output of goods and services in the nation — slowed from a 3.1% growth rate recorded between July and September 2024.
For the entirety of 2024, the world's largest economy expanded by 2.8%, a slight decrease from the 2.9% growth seen in 2023.
Consumer spending increased at a 4% rate, up from 3.7% in the third quarter of 2023. However, business investment declined, primarily due to an 8.7% drop in spending on equipment.
A reduction in business inventories subtracted 0.84 percentage points from fourth-quarter GDP growth.
A specific GDP component that reflects the economy’s fundamental strength rose at an annual rate of 2.9% in the fourth quarter, down from the earlier estimate of 3.2% and the third quarter’s 3.4%. This measure includes consumer spending and private investment while excluding more volatile elements such as exports, inventories, and government expenditure.
The report released on Wednesday highlighted ongoing inflationary pressures at the end of 2024. The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, climbed at an annual rate of 2.4%, rising from 1.5% in the third quarter and surpassing the Federal Reserve’s 2% target. When excluding volatile food and energy costs, core PCE inflation stood at 2.6%, compared to 2.2% in the previous quarter.
Thursday’s release represents the government’s third and final assessment of fourth-quarter GDP.
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Looking ahead, the economic outlook appears more uncertain. Trump's recent decision to impose tariffs on various imports, including a newly announced 25% tax on foreign automobiles, may drive up inflation and discourage investment, potentially hindering economic growth.