The U.S. economy grew by 2.4% in the last quarter of 2024, an improvement over the previously estimated 2.3% growth.
The expansion was largely driven by a surge in consumer spending, but the future sustainability of this growth remains uncertain amid ongoing trade wars and other challenges introduced by President Donald Trump’s policies.
The U.S. Commerce Department reported that GDP growth slowed from a 3.1% pace in the third quarter of 2024. For the entire year, the U.S. economy grew by 2.8%, a slight decline from the 2.9% growth in 2023. Consumer spending, a major driver of the economy, rose at a robust 4%, up from 3.7% in the third quarter. However, business investment fell, particularly in equipment, which saw an 8.7% drop.
A reduction in business inventories subtracted 0.84 percentage points from fourth-quarter GDP growth. The government’s core measure of the economy’s underlying strength, which excludes volatile components like exports, inventories, and government spending, rose at a healthy 2.9% annual rate, down from previous estimates of 3.2% and 3.4% in the third quarter.
Inflation continued to be a concern at the end of 2024, with the Federal Reserve’s preferred inflation measure—the personal consumption expenditures (PCE) price index—rising 2.4%, up from 1.5% in the third quarter and exceeding the Fed’s 2% target. Excluding volatile food and energy prices, core PCE inflation registered 2.6%, compared to 2.2% in the previous quarter.
This report, the third and final review of fourth-quarter GDP, raises questions about the long-term effects of trade tensions, immigration policies, and the broader economic environment on the U.S. economy.
