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.
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. 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. At 3% in January, the year-over-year increase in consumer prices is down sharply 9.1% in June 2022 but remains stuck above the Fed’s 2% target. 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.
Thursday’s GDP report was the second of three Commerce Department looks at fourth-quarter economic growth. The final estimate comes out March 27.
