Catenaa, Thursday, February 27, 2025– US economic growth slowed in the fourth quarter of 2024, official data revealed on Thursday, with increases in consumer and government spending and decline in investments.
Commerce Department’s Bureau of Economic Analysis (BEA) said Gross Domestic Product(GDP) decreased to a 2.3% in Q4 year on year, after accelerating at a 3.1% pace in Q3.
Economists polled by Reuters had expected that GDP growth would be unrevised. GDP growth was revised up by less than 0.1 percentage point, which after rounding matched the 2.3% rate that was estimated last month.
“The increase in real GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased,” BEA said.
Nonetheless, consumer spending, which accounts for more than two-thirds of the economy, grew at a 4.2% rate last quarter after rounding, matching the previously estimated pace.
The economy grew 2.8% in 2024 after expanding 2.9% in 2023.
It is expanding well above the 1.8% rate that Federal Reserve policymakers view as the non-inflationary growth pace.
Fears are mounting that tariffs, which are a tax, will increase prices of goods and constrain the Federal Reserve’s ability to continue cutting interest rates.
Efforts by the Trump administration to slash spending and shrink the government, which have resulted in unprecedented layoffs of federal workers are also seen posing a risk to spending, the main engine of the economy. Federal contractors have also been affected by the spending cuts.
A measure of domestic demand, final sales to private domestic purchasers – excluding inventories, trade and government – increased at a 3.0% rate. Private final sales were previously estimated to have grown at a 3.2% pace.
