U.S. Economy Grew 2.4% in Fourth Quarter

27 Mar at 9:30 am

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U.S. Economy Grew 2.4% in Fourth Quarter/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The U.S. economy grew at a revised annual rate of 2.4% in the fourth quarter of 2024, thanks to robust consumer spending, according to a final government estimate. While full-year growth reached 2.8%, concerns loom over rising inflation, falling business investment, and potential economic fallout from President Trump’s trade and immigration policies.

FILE – A consumer places a flat of eggs in a shopping cart in a Costco warehouse Tuesday, Feb. 18, 2025, in Sheridan, Colo. (AP Photo/David Zalubowski, File)

Q4 GDP Report: Quick Look

Revised Growth Rate: U.S. GDP rose 2.4% in Q4 2024
Full-Year Growth: 2.8% annual growth, down slightly from 2023
Main Driver: Consumer spending jumped 4% at year’s end
Business Investment: Dropped, led by 8.7% fall in equipment
Inflation: PCE price index rose to 2.4%, above Fed’s target
Core Inflation: 2.6% annual rate excluding food & energy
Underlying Strength: Core GDP measure rose 2.9%
Concerns Ahead: Tariffs, workforce purges, deportations may impact growth

U.S. Economy Grew 2.4% in Fourth Quarter

Deep Look

Solid Growth in Late 2024, But Uncertainty Builds in 2025

The U.S. economy posted a healthy 2.4% annual growth rate in the final quarter of 2024, according to the Commerce Department’s final estimate released Thursday. The revised data reflects stronger-than-expected consumer spending, which surged 4% to cap off the year.

This growth, while a slowdown from the 3.1% pace in the third quarter, highlights the consumer sector’s resilience amid political and economic uncertainty. For the year, GDP rose 2.8%, just under the 2.9% rate from 2023, maintaining the country’s economic momentum despite global headwinds and domestic policy upheaval.

Spending Up, Investment Down

While consumers remained the driving force behind growth, business investment faltered. Equipment spending declined sharply—down 8.7%—and falling inventories shaved nearly a full percentage point from the overall GDP figure.

Still, a key category that strips out the most volatile components—like inventories, government spending, and exports—rose at a healthy 2.9% pace, suggesting underlying demand remained solid.

Inflation Pressures Mount

Inflation accelerated at year’s end, complicating the Federal Reserve’s path forward. The PCE price index, the Fed’s preferred inflation gauge, rose at a 2.4% annual rate in Q4, up from 1.5% in Q3. Core inflation, which strips out food and energy, climbed to 2.6%, exceeding the Fed’s 2% target and signaling continued pricing pressures.

Uncertain 2025 Outlook Under Trump Policies

Looking ahead, economists are increasingly wary. President Donald Trump’s recent escalation of trade restrictions—including a 25% tariff on foreign-made autos—may disrupt global supply chains, inflate consumer prices, and slow investment. His administration’s aggressive plans to slash the federal workforce and deport undocumented workers could also drag on overall growth.

“We’re seeing strong demand now, but that could easily shift if tariffs fuel inflation or if workforce reductions reduce productivity,” said Mary Lovely, an economist at the Peterson Institute.

Thursday’s GDP release was the government’s third and final revision for Q4, locking in data that reflects a strong finish to 2024 but clouded expectations for the months ahead.