US economy grew at 2.4% in Q4 on corporate profits boost
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The news: The US economy expanded at a faster clip than expected in the October to December period last year as corporate profits increased.
The numbers: Gross domestic product (GDP) increased at a 2.4% rate in the quarter, as corporate profits with inventory valuation and capital consumption adjustments increased USD204.7 billion ($325 billion) in the fourth quarter, in contrast to a decrease of USD15 billion the previous quarter.
The core personal consumption expenditures price index (which excludes food and energy), used by the Federal Reserve to gauge inflation increased 2.6%, a downward revision of 0.1 percentage points from its previous estimate.
The context: The rise in after-tax profits of 5.9% for the quarter is the highest increase seen in corporate profits for over two years. The figures may signal that US firms have more headroom for absorbing additional costs brought about by tariffs, without passing the increases on to consumers.
The data published by the Bureau of Economic Analysis (BEA) also covered real gross domestic income, another preferred measure of economic activity, which rose 4.5% in the period compared with an increase of 1.4% in Q3.
The BEA is due to publish US Personal Consumption Expenditures index on Friday, showing data on inflation and consumer spending for February.
The source: Bureau of Economic Analysis
