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But
it’s unclear whether the United States can sustain that growth
as President Donald Trump wages trade wars, purges the federal
workforce and promises mass deportations of immigrants working
in the country illegally.
Growth in gross domestic product — the nation’s output of goods
and services — decelerated from a 3.1% pace in July-September
2024, the Commerce Department said.
For all of 2024, the economy — the world’s biggest — grew 2.8%,
down a tick from 2.9% in 2023.
Consumer spending rose at a 4% pace, up from 3.7% in
third-quarter 2023. But business investment fell, led by an 8.7%
drop in investment in equipment.
A drop in business inventories shaved 0.84 percentage points off
fourth-quarter GDP growth.
A category within the GDP data that measures the economy’s
underlying strength rose at a healthy 2.9% annual rate in the
fourth quarter, slipping from the government's previous estimate
of 3.2% and from 3.4% in the third quarter. This category
includes consumer spending and private investment but excludes
volatile items like exports, inventories and government
spending.
Wednesday’s report showed continued inflationary pressure at the
end of 2024. The Federal Reserve’s favored inflation gauge – the
personal consumption expenditures, or PCE, price index – rose at
an annual rate of 2.4%, up from 1.5% in the third quarter and
above the Federal Reserve’s 2% target. Excluding volatile food
and energy prices, so-called core PC inflation registered 2.6%,
compared to 2.2% in the third quarter.
Thursday's report was the government's third and final look at
fourth-quarter GDP.
The outlook is cloudier. Trump's decision to slap taxes on a
range of imports — including a 25% tax on foreign autos
announced Wednesday — could push up inflation and disrupt
investment, hurting growth.
The fourth-quarter showed the U.S. economy “before the enormous
surge in policy uncertainty, particularly trade, took hold and
the Trump administration imposed additional tariffs,” wrote Ryan
Sweet, chief U.S. economist at Oxford Economics. "The
combination of policy uncertainty, tariffs, and tightening
financial market conditions are weighing on growth early this
year.''
U.S. consumer confidence is sliding sharpy over anxiety about
both tariffs and inflation, and major retailers are lowering
their expectations for the year, saying that customers are
already pulling back on spending.
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