The expansion in the last three months of 2024 was supported by a surge in consumer spending and is an improvement on previous estimates.
United States’ GDP jumped by 2.4% in the last quarter of 2024, slightly higher than the 2.3% previously estimated.
But it’s unclear whether the US can sustain solid growth as President Donald Trump wages trade wars, purges the federal workforce and promises mass deportations of immigrants working in the country illegally.
The Commerce Department said that growth in gross domestic product decelerated from a 3.1% pace in July-September 2024.
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 favoured inflation gauge, the personal consumption expenditures (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 on Wednesday, could push up inflation and disrupt investment, hurting growth.
