During the last quarter of 2024, the US economy grew at an annual rate of 2.3%, according to the Bureau of Economic Analysis. This expansion was below the expected 2.6% and represented a slowdown from the 3.1% increase seen in the previous quarter.
In the fourth quarter of 2024, the United States economy expanded at an annualized rate of 2.3%, as reported by the Bureau of Economic Analysis. This growth rate fell short of the anticipated 2.6% and marked a deceleration from the 3.1% growth observed in the third quarter.
Growth in the fourth quarter was mainly fueled by a rise in consumer spending and government outlays. As a major factor of the Gross Domestic Product (GDP), consumer spending stayed strong, indicating continued household consumption. Government outlays also played a positive role, with significant boosts in federal and state spending.
Quarterly Comparison Analysis
The 2.3% growth in the fourth quarter marks the slowest quarterly increase since 2018, a time when the economy expanded by 0.6% in that same period. Annually, the economy grew by 2.8% in 2024, just under the 2.9% expansion noted in 2023.
Elements Leading to the Deceleration
Numerous factors played a role in the tempered growth seen in the fourth quarter:
- Reducción de Inversiones: Hubo una caída en las actividades de inversión, lo que compensó en parte las ganancias del gasto de los consumidores y del gobierno.
- Dinámicas Comerciales: Las importaciones disminuyeron en este período, lo cual, aunque resta en el cálculo del PIB, sugiere cambios potenciales en la demanda interna y ajustes en la cadena de suministro global.
- Investment Decline: There was a decrease in investment activities, which partially offset the gains from consumer and government spending.
- Trade Dynamics: Imports decreased during this period, which, while a subtraction in GDP calculation, indicates potential shifts in domestic demand and global supply chain adjustments.
Ongoing inflation continues to be worrisome, as the Consumer Price Index (CPI) increased to 2.9% in December 2024. This rise in inflation has prompted economists to revise their projections, expecting sustained price pressures over the next year. The Federal Reserve is tasked with the challenge of managing inflation control measures while avoiding hindrances to economic growth.
Summary of the Labor Market
In spite of prior worries, the labor market showed strength, with the unemployment rate dropping to 4.1% in December 2024. Nonetheless, forecasts indicate a minor rise in unemployment by the close of 2025, signifying potential changes in the labor market as the economy faces continuous challenges.
Despite earlier concerns, the labor market demonstrated resilience, with the unemployment rate declining to 4.1% in December 2024. However, projections suggest a slight increase in unemployment by the end of 2025, reflecting potential adjustments in the labor market as the economy navigates ongoing challenges.
Observing the future, the economic forecast for 2025 offers a varied scenario:
Looking ahead, the economic outlook for 2025 presents a mixed picture:
- Growth Projections: The Congressional Budget Office (CBO) projects a moderation in economic growth, with GDP expected to increase by 1.9% in 2025, down from an estimated 2.3% in 2024.
- cbo.gov
- Inflation Expectations: Economists anticipate that inflation will remain above the Federal Reserve’s 2% target, influenced by factors such as ongoing supply chain disruptions and policy decisions.
- reuters.com
- Policy Considerations: Proposed tariffs and stricter immigration policies could exert additional inflationary pressures and impact labor market dynamics, necessitating careful monitoring and policy adjustments.