Second estimate of US growth confirms a 2.3% annual pace expansion in
fourth quarter
[February 28, 2025] By
PAUL WISEMAN
WASHINGTON (AP) — The American economy grew at a solid 2.3% annual rate
the last three months of 2024, supported by a burst of year-end consumer
spending, the government said, leaving unchanged its initial estimate of
fourth-quarter growth.
The outlook for 2025 is cloudier as President Donald Trump pursues trade
wars, cutbacks in the federal workforce and mass deportations.
The Commerce Department reported Thursday that growth in gross domestic
product — the nation's output of goods and services — decelerated from a
3.1% pace in July-September 2024.
For all of last year, the economy grew 2.8%, compared with 2.9% in 2023.
Consumer spending advanced at a 4.2% pace from October through December.
Business investment fell in the fourth quarter, pushed lower by a 9%
drop in equipment spending. A drop in business inventories shaved 0.81
percentage points off October-December growth.
But a category within the GDP data that measures the economy’s
underlying strength rose at a healthy 3% annual rate from July through
September, slipping from 3.4% in the third quarter and down slightly
from the government's initial estimate. This category includes consumer
spending and private investment but excludes volatile items like
exports, inventories and government spending.
Wednesday’s report also showed that inflationary pressure persists in
the economy. The Federal Reserve’s favored inflation gauge — called the
personal consumption expenditures index, or PCE — rose at a 2.4% annual
pace last quarter, up from 1.5% in the third quarter and above the Fed’s
2% target. Excluding volatile food and energy prices, so-called core PCE
inflation was 2.7%, up from 2.2% in the July-September quarter. Both
those inflation numbers were slightly higher than they’d been in the
Commerce Department's initial report.
The report shows that Trump inherited a healthy economy when he took
office last month. Growth has now topped a decent 2% for nine of the
last 10 quarters. Unemployment is low at 4%, and inflation has come down
from the highs it hit in mid-2022.
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A consumer places a flat of eggs in a shopping cart in a Costco
warehouse Tuesday, Feb. 18, 2025, in Sheridan, Colo. (AP Photo/David
Zalubowski, File)
 After lowering its benchmark
interest rate three times in the last four months of 2024, the
Federal Reserve left it unchanged in January and appears to be in no
hurry to start cutting again. Progress against inflation has stalled
in recent months.
President Donald Trump's plans to impose tax imports at a scale not
seen since the 1930s risks raising prices and intensifying
inflationary pressure. Deporting millions of immigrants working in
the country illegally, as Trump has promised, could also create
labor shortages that push up wages and feed inflation.
The Labor Department reported Thursday that the number of Americans
filing for unemployment benefits rose unexpectedly last week to the
highest level in three months. Some economists expect those numbers
to tick higher as layoffs of federal workers ordered Elon Musk's
Department of Government Efficiency start to show up in the data.
High Frequency Economics already expects January-March GDP growth to
fall below 1%, lower if Trump goes ahead with plans to slap 25%
taxes on goods from Canada and Mexico. On Thursday, Trump vowed to
do just that early next week.
Thursday's GDP report was the second of three Commerce Department
looks at fourth-quarter economic growth. The final estimate comes
out March 27.
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