US economy grows solid 2.3% in October-December on eve of Trump return to White House

WASHINGTON — 

A humming American system ended 2024 connected a coagulated enactment with user spending continuing to thrust growth, and up of what could beryllium a important alteration successful absorption nether a Trump administration.

The Commerce Department reported Thursday that gross home merchandise — the economy's output of goods and services — expanded astatine a 2.3% yearly complaint from October done December.

For the afloat year, the system grew a steadfast 2.8%, compared with 2.9% successful 2023.

The fourth-quarter maturation was a tick beneath the 2.4% economists had expected, according to a survey of forecasters by the information steadfast FactSet.

Consumer spending grew astatine a 4.2% pace, fastest since January-March 2023 and up from 3.7% successful July-September past year. But concern business tumbled arsenic concern successful instrumentality plunged aft 2 consecutive beardown quarters.

Wednesday's study besides showed persistent inflationary unit astatine the extremity of 2024. The Federal Reserve's favored ostentation gauge — called the idiosyncratic depletion expenditures index, oregon PCE — roseate astatine a 2.3% yearly gait past quarter, up from 1.5% successful the 3rd 4th and supra the Fed's 2% target. Excluding volatile nutrient and vigor prices, alleged halfway PCE ostentation was 2.5%, up from 2.2% successful the July-September quarter.

A driblet successful concern inventories shaved 0.93 percent points disconnected fourth-quarter growth.

But a class wrong the GDP information that measures the economy's underlying spot roseate astatine a steadfast 3.2% yearly complaint from July done September, slipping from 3.4% successful the 3rd quarter. This class includes user spending and backstage concern but excludes volatile items similar exports, inventories and authorities spending.

Paul Ashworth, main North America economist astatine Capital Economics, said that fig "suggests the system remains strong, peculiarly fixed the fourth-quarter disruptions,'' including a onslaught astatine Boeing and the aftermath of 2 hurricanes.

President Donald Trump has inherited a steadfast economy. Growth has been dependable and unemployment debased — 4.1% successful December.

The system has proven remarkably resilient aft the Fed's ostentation fighters raised rates 11 times successful 2022 and 2023 to combat the biggest surge successful user prices since the 1980s. Instead of sliding into a recession, arsenic astir economists predicted, GDP kept expanding. Growth has present topped 2% successful 9 of the past 10 quarters.

On Wednesday, the Fed near its benchmark involvement complaint unchanged aft making 3 cuts since September. With the system rolling along, Fed Chair Jerome Powell told reporters, "we bash not request to beryllium successful a hurry'' to marque much cuts. The Fed is besides cautious due to the fact that advancement against ostentation has stalled successful caller months aft falling from four-decade highs deed successful mid-2022.

The European Central Bank chopped its benchmark complaint by a 4th constituent Thursday, underlining the opposition betwixt much robust maturation successful the U.S. system and stagnation successful Europe, which recorded zero maturation astatine the extremity of past year.

The U.S. economical outlook has go much cloudy, however. Trump has promised to chopped taxes and easiness regulations connected business, which could velocity GDP growth. But his program to enforce large taxes connected imports and to deport millions of immigrants moving successful the United States illegally could mean slower maturation and higher prices.

Trump said past week that helium would little lipid prices and past "demand'' little involvement rates – a taxable helium said he'd instrumentality up with Powell. But the Fed seat deflected questions astir Trump's comments Wednesday and said he'd had nary interaction with the president.

Trump has besides tried to reshape the national government, offering buyouts to workers and issuing a memo Monday nighttime freezing national grants, past rescinding the memo Wednesday aft a nationalist outcry.

Citing the "squeeze'' connected the national government, Ashworth wrote successful a commentary, "we wouldn't beryllium amazed to spot a reversal successful the archetypal quarter. As a starting point, we expect first-quarter GDP maturation to dilatory marginally beneath 2%.''

Thursday's GDP merchandise was the archetypal of 3 Commerce Department estimates of October-December growth.