US GDP Q3 2024/ US economic growth/ consumer spending 2024/ inflation easing/ Donald Trump economic policy/ Q3 exports/ Federal Reserve rate cuts/ WASHINGTON/ Newslooks/ J. Mansour/ Morning Edition/ The U.S. economy grew at a steady 2.8% annualized rate in Q3 2024, driven by robust consumer spending and rising exports. Despite steady growth and easing inflation, public sentiment remains critical, contributing to Donald Trump’s election victory. The report shows a resilient economy but highlights concerns in business investment and inflation challenges.
US Economic Growth in Q3: Quick Looks
- GDP Growth: The U.S. economy expanded at a 2.8% annualized rate in Q3 2024, matching initial estimates.
- Consumer Spending: Increased at a 3.5% annualized pace, the fastest since late 2023.
- Exports & Business Investment: Exports surged by 7.5%, but business investment slowed.
- Inflation Progress: Core PCE inflation fell to 2.1%, easing from the previous quarter’s 2.8%.
- Political Impact: Persistent inflation concerns influenced voters to return Donald Trump to the presidency.
US Economy Grows 2.8% in Q3, Driven by Consumer Spending
Deep Look
The U.S. economy sustained its momentum in the third quarter of 2024, growing at a robust annualized rate of 2.8%, the Commerce Department reported on Wednesday. This growth, unchanged from the initial estimate, highlights the resilience of the world’s largest economy despite challenges such as inflation and voter dissatisfaction.
Consumer spending, which accounts for 70% of U.S. economic activity, played a pivotal role in driving growth, increasing at a 3.5% annual rate. This marks the fastest pace of consumer spending since the fourth quarter of 2023, up from 2.8% in the previous quarter. The surge was complemented by a notable 7.5% increase in exports, the most significant gain in two years.
Economic Strength and Challenges
Within the broader GDP data, a key category measuring the economy’s core strength — encompassing consumer spending and private investment but excluding more volatile elements like exports and government spending — rose at a solid 3.2% rate. However, the report also noted a sharp slowdown in business investment, particularly in housing and nonresidential buildings like offices and warehouses. By contrast, spending on equipment surged, reflecting mixed business sentiment.
President-elect Donald Trump will inherit an economy characterized by steady growth, low unemployment at 4.1%, and easing inflation. While inflation has dropped significantly from a four-decade high of 9.1% in mid-2022 to 2.6% in Q3 2024, it remains slightly above the Federal Reserve’s 2% target. The central bank has responded by cutting its benchmark interest rate twice in recent months, with another rate reduction anticipated in December.
Despite these positive indicators, voters remain dissatisfied with inflation’s lingering effects. Prices are approximately 20% higher than in February 2021, a persistent burden on households.
Inflation Relief in Focus
Encouragingly, inflation metrics showed further signs of easing. The Federal Reserve’s preferred gauge, the personal consumption expenditures (PCE) index, rose at a modest 1.5% annualized rate in Q3, down from 2.5% in the prior quarter. Core PCE inflation, which excludes volatile food and energy prices, declined to 2.1%, compared to 2.8% in Q2.
Political and Economic Outlook
Despite economic resilience, Trump’s return to the White House reflects widespread public frustration with high prices. The President-elect has vowed to implement sweeping economic reforms, including tariffs on imports from China, Mexico, and Canada. Economists caution that such measures could push inflation higher, as import taxes typically raise costs for U.S. businesses and consumers.
Wednesday’s release was the second of three estimates for third-quarter GDP, with a final update expected on December 19. This data, combined with Trump’s forthcoming policies, sets the stage for potential shifts in the economic landscape as 2025 approaches.
