US economic growth slowed to 2.3% in late 2024
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The news: US economic growth slowed in the final quarter of 2024, expanding at an annualised 2.3%—lower than economists’ expectations—after a 3.1% rise in the previous quarter, according to the Bureau of Economic Analysis.
The numbers: Consumer spending, which accounts for more than two-thirds of economic activity, grew at a 4.2% pace, driven by motor vehicle sales.
Inflation, measured by the PCE price index excluding food and energy, rose 2.5%.
Business investment declined 2.2%, including a 7.8% drop in equipment spending, partly due to a Boeing strike.
Government spending increased 2.5%.
Inventories were the largest drag on growth in the fourth quarter, subtracting nearly a full percentage point from GDP growth.
The context: The economy expanded 2.8% in real terms in 2024, slightly lower than the 2.9% growth in 2023, but still defying expectations of a sharp slowdown.
Federal Reserve chairman Jerome Powell on Wednesday said the economy remains strong but left interest rates unchanged as the bank saw inflation as still somewhat elevated.
Economists cited by Reuters and Bloomberg predict slower growth in 2025, with higher inflation fuelled by some of President Trump’s fiscal and trade policies, such as tariffs on imports, mass deportations of undocumented immigrants and tax cuts.
