The following is a report from the Associated Press.
A humming American economy ended 2024 on a solid note with consumer spending continuing to drive growth, and ahead of what could be a significant change in direction under a Trump administration.
The Commerce Department reported Thursday that gross domestic product — the economy’s output of goods and services — expanded at a 2.3% annual rate from October through December.
For the full year, the economy grew a healthy 2.8%, compared with 2.9% in 2023.
The fourth-quarter growth was a tick below the 2.4% economists had expected, according to a survey of forecasters by the data firm FactSet.
Consumer spending grew at a 4.2% pace, fastest since January-March 2023 and up from 3.7% in July-September last year. But business investment tumbled as investment in equipment plunged after two straight strong quarters.
Wednesday’s report also showed persistent inflationary pressure at the end of the 2024. The Federal Reserve’s favored inflation gauge — called the personal consumption expenditures index, or PCE — rose at a 2.3% annual pace last quarter, up from 1.5% in the third quarter and above the Fed’s 2% target. Excluding volatile food and energy prices, so-called core PCE inflation was 2.5%, up from 2.2% in the July-September quarter.
A drop in business inventories shaved 0.93 percentage points off fourth-quarter growth.
But a category within the GDP data that measures the economy’s underlying strength rose at a healthy 3.2% annual rate from July through September, slipping from 3.4% in the third quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
Paul Ashworth, chief North America economist at Capital Economics, said that figure “suggests the economy remains strong, particularly given the fourth-quarter disruptions,’’ including a strike at Boeing and the aftermath of two hurricanes.
Click here to read the full report by Paul Wiseman at the Associated Press.
