Washington (AP) – An American saved economy finished 2024 on a solid note with Consumer expenses continue to stimulate growth and ahead of what could be a change of direction Under a Trump administration.
The Commerce Department said Thursday that gross domestic product – the production of economy goods and services – extended to an annual rate of 2.3% from October to December.
For the whole year, the economy increased by 2.8%, compared to 2.9% in 2023.
The growth of the fourth quarter was a tick less than 2.4% of economists expected, according to a survey of the forecasters of the Factseet data company.
Consumer spending increased at a rate of 4.2%, the fastest since January-March 2023 and more than 3.7% in July-September from last year. But companies’ investment dropped while investment in equipment plunged after two consecutive quarters.
Wednesday report also showed persistent inflationary pressure At the end of 2024. The favored inflation gauge of the Federal Reserve – called the Personal Consumer Consumption Index, or PCE – increased at an annual rate of 2.3% in the last quarter, against 1.5% in the third quarter and more of the target target of the Fed. The exclusion of volatile food and energy prices, so -called basic PCE inflation was 2.5%, compared to 2.2% in the quarter from July to September.
A drop in commercial stocks shaved 0.93 percentage points on the growth of the fourth quarter.
But a category in GDP data which measures the underlying force of the economy increased to a healthy annual rate of 3.2% from July to September, going from 3.4% in the third quarter. This category includes consumption spending and private investments, but excludes volatile elements such as exports, stocks and public spending.
Paul Ashworth, chief economist of North America in Capital Economics, said that this figure “suggests that the economy remains strong, in particular given the disturbances of the fourth quarter”, including a strike in Boeing and the consequences two hurricanes.
President Donald Trump inherited a healthy economy. Growth was stable and low unemployment – 4.1% in December.
The economy turned out to be remarkably resilient after fed inflation combatants increased the rates 11 times in 2022 and 2023 to combat the greatest increase in consumer prices since the 1980s. Instead of Slipping into a recession, as most economists predicted, GDP continued to develop. Growth has now exceeded 2% in nine of the last 10 quarters.
Wednesday, the Fed left its unchanged reference interest rate After making three cuts since September. With the rolling economy, the president of the Fed, Jerome Powell, told journalists: “We do not need to be in a hurry” to make more cuts. The Fed is also cautious because progress against inflation has stalled in recent months after falling summits of four decades have reached mid-20122.
The European Central Bank Reduce your reference rate A quarter of a point on Thursday, highlighting the contrast between more robust growth in the American economy and stagnation in Europe, which recorded zero growth at the end of last year.
However, American economic prospects have become more cloudy. Trump has promised to reduce taxes and mitigate business regulations, which could speed up GDP growth. But its plan to impose large import taxes and to deport millions of immigrants working illegally in the United States could mean slower growth and higher prices.
Trump said last week that he would lower oil prices and then “Demand” of lower interest rates – A subject he said he would approach Powell. But the president of the Fed deviated from the questions about Trump’s comments on Wednesday and said he had no contact with the president.
Trump also tried to reshape the federal government, offering Affairs to workers And deliver a service note Monday evening freeing federal subsidies, then cancel the memo on Wednesday after a public outcry.
Citing the “compression” of the federal government, Ashworth wrote in a commentary “, we would not be surprised to see a reversal in the first quarter. As a starting point, we expect the growth of GDP in the first trimester to slow down slightly below 2%. ”
The release of Thursday’s GDP was the first of the three estimates of the October-December growth department.
