The US economy wrapped up 2024 on a strong be aware, with shopper spending and authorities help enjoying key roles in driving growth, in line with new knowledge from the Commerce Department.
Despite some challenges, the economy grew by 2.3% in the fourth quarter, barely under the two.4% that economists had anticipated. For the total 12 months, GDP grew by 2.8%, a strong efficiency, though barely down from the two.9% growth in 2023.
Consumer spending stays sturdy
Consumer spending rose by 4.2% in the ultimate quarter of 2024, the quickest tempo since early 2023. This growth was up from 3.7% in the earlier quarter. The economy additionally benefitted from authorities spending and continued funding, though enterprise funding slowed, notably in gear spending, which fell sharply after two strong quarters.
Matthew Martin, senior US economist at Oxford Economics, stated, “Consumers have been the foundation of the economy, and they’ve been the biggest driver of resilient growth in 2024,” as quoted by the AFP information company. He believes this growth will proceed, supported by low layoffs, wholesome job growth, and rising wages.
Inflation pressures persist
The report additionally confirmed ongoing inflation. The Federal Reserve’s most well-liked inflation measure, the private consumption expenditures (PCE) index, rose by 2.3% in the fourth quarter, up from 1.5% in the third quarter. Core PCE, which excludes meals and vitality, elevated by 2.5%, barely up from 2.2% in the earlier quarter.
Despite these inflation pressures, the economy remained strong. A key a part of GDP, which excludes unstable gadgets like exports and inventories, grew by 3.2% in the third quarter, down from 3.4% in the earlier quarter.
Donald Trump inherits a wholesome economy
President Donald Trump, who took workplace in January 2025, inherited a strong economy, with growth persevering with regardless of excessive rates of interest. Unemployment was 4.1% in December, and job features stayed regular. The Federal Reserve stored its curiosity rate unchanged in December, after reducing it 3 times since September. Fed Chair Jerome Powell was quoted as saying to the Associated Press, “We do not need to be in a hurry to make more cuts,” as a result of economy’s energy.
Global comparability
The US economy is rising strongly, whereas Europe is struggling, having seen zero growth on the finish of final 12 months. The European Central Bank not too long ago lowered its benchmark rate attributable to weak efficiency. In the US, strong shopper spending, low unemployment, and rising wages have helped preserve growth, regardless of ongoing inflation concerns.
Trump has promised to chop taxes and scale back enterprise rules, however his plans on tariffs and immigration would possibly gradual growth and lift costs. KPMG’s chief economist, Diane Swonk, identified that the results of those insurance policies will take time. While some analysts anticipate growth to gradual in 2025, they nonetheless consider the US economy will stay strong for now.
