US Economy Grew 2.3% In Fourth Quarter

The U.S. economy expanded at a 2.3% annual rate in the fourth quarter of 2024, according to the Commerce Department's Bureau of Economic Analysis. This growth rate aligns with both the initial estimate and economists' expectations, marking a slowdown from the 3.1% growth seen in the third quarter.

The deceleration in growth was attributed to declines in business investment and exports, although consumer spending provided a boost by increasing 4.2% during the quarter. Government spending also rose by 2.9%, slightly higher than initially estimated.

Business investment, however, saw a significant decline of 5.7%, with equipment spending dropping 9%.

"Business equipment spending is among the most sensitive components of GDP to changes in policy uncertainty, and there hasn't been a post-election reprieve in uncertainty, particularly for trade," said Ryan Sweet, chief U.S. economist at Oxford Economics.

Despite these declines, consumer confidence remained a driving force, with disposable personal income increasing by 2.5%.

The Federal Reserve's favored inflation gauge, the personal consumption expenditures index, rose to a 2.4% annual pace, surpassing the Fed's 2% target. Core inflation, excluding food and energy, increased to 2.7%.