Economic growth in the US decelerated in the final quarter of the previous year due to a decrease in trade and investment, compounded by hurricanes and labor strikes.
During the period between October and December, the economy expanded by 2.3% annually, a drop from the 3.1% growth in the preceding three months, as reported by the US Commerce Department. Despite being driven by robust consumer spending, the growth rate was lower than what economists had predicted.
The latest data reflects a climate of uncertainty surrounding the trajectory of the world's largest economy, particularly with US President Donald Trump advocating for significant changes in policy. Trump's proposed measures include substantial cuts in government spending and the potential imposition of trade tariffs, which may be disclosed this week.
Although the US economy was anticipated to grow by around 2.5% in the final quarter of 2024, analysts believe that the details provided in the Commerce Department's report indicate that growth has remained steady.
Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, commented that The US consumer has been unstoppable, attributing this trend to factors such as wealth accumulation, a robust labor market, and increased lending. Zentner also noted that the overall growth for the year was surprisingly strong.
Consumer spending, a major factor driving the US economy, saw a 4.2% increase. However, Samuel Tombs, an analyst at Pantheon Macroeconomics, pointed out that this surge was primarily due to a spike in the purchase of goods, including automobiles, which could be linked to concerns about potential tariff-induced price hikes.
The Commerce Department's report indicated a decrease in both exports and imports of goods, activities whose impact on the overall growth figure was essentially balanced out. Economists exclude imports from growth calculations as they are products not produced domestically. Private investment also declined, likely affected by the strike at aerospace company Boeing.
Analysts cautioned that these preliminary figures, subject to revisions, might have been influenced by disruptions caused by two significant hurricanes that struck the US during the autumn.