The United States economy grew at an annualised rate of 2.3% in the fourth quarter of 2024, down from the 3.1% pace recorded in the previous quarter, according to revised data from the Commerce Department's Bureau of Economic Analysis (BEA).
The figures, largely in line with market estimates, confirm a slowdown amid concerns over tariffs and rising prices.
The revised data reflected stronger government spending and exports, though this was offset by weaker consumer spending and investment.
However, consumer spending, which drives over two-thirds of U.S. economic activity, maintained a robust 4.2% growth rate, unchanged from initial estimates.
For the full year, the economy expanded by 2.8%, slightly below the 2.9% growth rate recorded in 2023 but still above the Federal Reserve’s estimated non-inflationary growth rate of 1.8%.
Economic momentum appears to have weakened further at the start of 2025. Harsh winter conditions, including snowstorms and unseasonably cold weather in January, impacted retail sales, housing activity, and job growth.
Tariffs imposed or planned by President Donald Trump’s administration have weighed on consumer and business sentiment. There are growing concerns that these tariffs, by increasing prices on imported goods, could limit the Federal Reserve’s ability to continue cutting interest rates.
The administration’s push to reduce government spending has also contributed to economic uncertainty. Budget cuts have led to widespread federal worker layoffs, affecting household income and consumer spending.
Meanwhile, inflation pressures persist, with the core personal consumption expenditures (PCE) price index - excluding food and energy - rising at an upwardly revised 2.7% annualised rate in Q4, compared to the previously reported 2.5%. This measure is closely monitored by the Federal Reserve, which targets 2% inflation.
Minutes from the Federal Open Market Committee's January 28-29 policy meeting, released last week, indicated continued concern among policymakers regarding inflationary pressures stemming from the administration’s trade and fiscal policies.
