US Economy's Q4 Growth Disappoints, Led by Consumer Spending
The US economy's fourth-quarter growth fell short of expectations, as the Bureau of Economic Analysis reported an annualized growth rate of 2.3%, below the 2.6% forecast. This marks a slowdown from the 3.1% growth recorded in Q3.
Consumer and government spending fueled the quarter's growth, while declines in investment partially offset the gains. For the full year, the economy grew by 2.8%, slightly below the 2.9% in 2023 but higher than the 2.5% in 2022.
"The US consumer remains the driving force behind economic growth," said Nationwide chief economist Kathy Bostjancic. "However, declining business investment, flat net exports, and a sharp decline in inventories held back growth."
The core Personal Consumption Expenditures index, excluding food and energy, grew by 2.5% in Q4, matching estimates and surpassing the previous quarter's 2.2%.
Investors are closely monitoring the data to gauge the Federal Reserve's potential interest rate cuts in 2025. Fed Chair Powell indicated during a press conference that inflation remains elevated and the economy remains strong.
Following the Fed meeting, markets predict a less than 50% chance of interest rate cuts before June, according to the CME FedWatch Tool.
This economic news is still developing and will be updated as more information becomes available.