The U.S. economy experienced a slower-than-anticipated growth in the fourth quarter of 2024, as highlighted in a recent Commerce Department release.
According to the report, the gross domestic product (GDP) increased by 2.3% in the fourth quarter, a deceleration from the 3.1% rise noted in the third quarter. This figure fell short of economists' predictions, which pegged GDP growth at 2.6%.
The growth seen in the fourth quarter was chiefly driven by heightened consumer and government spending, though partially counterbalanced by a dip in investment. The report attributed the slowdown from the previous quarter principally to declines in both investment and exports.
Commenting on the results, FHN Financial Macro Strategist Will Compernolle remarked, "Although the Q4 GDP growth was less robust than anticipated, the economy concluded 2024 on a strong footing. Domestic demand is vigorous, inflation met expectations, and the notable inventory reduction is unlikely to continue into the following quarters."
He further explained, "The Federal Reserve can interpret this report with cautious optimism, seeing that inflation isn't accelerating significantly, nor is growth dipping below its potential."
The report also noted a 2.3% surge in consumer prices for the fourth quarter, up from a 1.5% increase in the prior quarter. Excluding volatile categories such as food and energy, core consumer prices rose by 2.5%, following a 2.2% rise in the previous quarter.
