The US economy grew at an annual rate of 2.3% in the final quarter of 2024, slowing from 3.1% in the previous three months, according to the US Commerce Department.
A drop in trade and private investment, along with disruptions from hurricanes and labor strikes, contributed to the slowdown.
Despite strong consumer spending, the growth rate fell short of economists’ 2.5% forecast, raising concerns about the country’s economic trajectory.
Uncertainty Over Economic Policy
The figures come at a time of policy uncertainty as President Donald Trump pushes for economic reforms. His plans include:
- Cutting government spending
- Imposing trade tariffs, possibly announced this week
Economists warn these changes could impact future growth, depending on their implementation and effect on business confidence.
Consumer Spending Remains Strong
A 4.2% rise in consumer spending helped offset declines in exports and private investment.
Analysts noted that:
- The increase was driven by higher purchases of goods, particularly cars
- A decline in imports also influenced overall trade figures
However, some experts caution that this spending surge may be temporary, as consumers rushed to buy goods ahead of potential tariff hikes.
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Analysts Weigh In
Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, described overall 2024 growth as “surprisingly strong”, citing consumer resilience supported by:
- Wealth gains
- A strong labor market
- Increased lending
Samuel Tombs of Pantheon Macroeconomics warned the consumer spending surge could be short-lived, as it was likely driven by concerns over rising prices due to tariffs.
What’s Next for the US Economy?
With trade policies in flux and domestic demand under scrutiny, the outlook remains uncertain.
While consumer spending has kept growth steady, any major policy shifts in trade or government spending could shape the economic landscape in the months ahead.
