Consumer spending maintained the US economy buzzing in October, November and December. The economy increased at an annual rate of 2.3% during the quarter.
Kamil Krzaczynski / AFP
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Kamil Krzaczynski / AFP
Consumer spending has maintained the US economy buzzing in the last months of 2024.
The country’s gross domestic product increased at an annual rate of 2.3% in October, November and December, according to a report from the Commerce Department on Thursday. It is slightly down compared to the previous quarter when the GDP increased at an annual rate of 3.1%.
Consumers have increased their expenses in recent months of the year, opening their portfolios for goods and services. Expenses on large hairstyle items have jumped at an annual rate of more than 12%, which may have been partly motivated by the desire to buy before the new prices threatened by President Trump maintain.
“The consumer stimulates the economic train,” explains Mark Zandi, chief economist at Moody’s Analytics. “The economy creates a cargo of jobs and unemployment is low”, so buyers have money to spend.
On the other hand, the investment of companies was down during the quarter.
The economy ended last year 2.5% larger than in the last months of 2023. It is stronger growth than most other countries last year. GDP in Europe, for example, was flat.
A booming stock market and a value of record houses have also strengthened the willing people to spend – especially among the rich.
“When they feel rich, they feel confident and they save a little less and spend a little more,” said Zandi. “The real juice here comes from people who are in good shape.
The forecasters have expressed a certain uncertainty as to whether solid economic growth would continue this year.
“The biggest risk for our 2025 forecasts is an immediate taxation of the general prices on the main trade partners,” wrote Bernard Yaros of Oxford Economics in a research note.
He plans that if Trump holds his threat of imposing prices on the goods of Canada, Mexico and China, he could have more than 1% reduction on GDP growth this year.
Even if the Americans spend, many still feel worried about the economy. A Conference Board report published this week shows that consumer confidence fell to a hollow of four months in January.
