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The American economy experienced a robust annual growth rate of 2.3 percent during the final quarter of 2024, bolstered by a surge in consumer spending at year-end, according to government reports, which confirmed its initial assessment of fourth-quarter growth. The economic outlook for 2025 appears more uncertain as President Donald Trump continues to engage in trade disputes, implement reductions in the federal workforce, and carry out mass deportations.
The Commerce Department indicated on Thursday that the growth rate of the gross domestic product, which measures the nation’s production of goods and services, slowed from a 3.1 percent rate observed in the July-September period of 2024. Over the course of the previous year, the economy expanded by 2.8 percent, a slight decline from the 2.9 percent growth recorded in 2023. Consumer spending increased at a rate of 4.2 percent from October to December.
The report indicates that upon assuming office last month, Trump took over an economy that was in good health. Economic growth has consistently exceeded a respectable 2 percent for nine out of the last ten quarters. The unemployment rate stands at a low 4 percent, and inflation has decreased from the peaks experienced in mid-2022.
Following three reductions in its benchmark interest rate during the last four months of 2024, the Federal Reserve opted to maintain the rate in January and does not seem to be in a rush to implement further cuts. However, progress in combating inflation has stalled recently. As of January, the year-over-year rise in consumer prices is at 3 percent, a significant drop from the 9.1 percent recorded in June 2022, yet it remains above the Federal Reserve’s target of 2 percent.
President Donald Trump’s proposal to implement import taxes at levels not witnessed since the 1930s poses a significant risk of increasing prices and exacerbating inflationary pressures. Additionally, the potential deportation of millions of undocumented immigrants, as promised by Trump, may lead to labor shortages that could drive up wages and contribute to inflation.
The GDP report released on Thursday represents the second of three assessments by the Commerce Department regarding economic growth in the fourth quarter. The final estimate is scheduled for release on March 27.
