U.S. economy wraps 2024 on solid footing with 2.3% growth rate
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Shoppers in New York City ahead of last year's holiday season. Photo: Michael M. Santiago/Getty Images
The U.S. economy grew at a 2.3% annualized rate in the final three months of 2024, the Commerce Department said on Thursday — closing out a year of strong growth.
Why it matters: Despite some lost momentum at the end of the year, President Trump still inherits an economy expanding at a healthy clip, even as interest rates and inflation remain elevated.
By the numbers: The fourth-quarter growth figures are a slowdown from the 3.1% rate in the previous three-month period.
- Consumer spending and government spending picked up pace, though a slowdown in business investment and a drawdown in inventories weighed on growth.
- Housing activity bounced back, after two straight quarters that the sector dragged growth down.
The big picture: Last year was yet another period that defied economists' growth expectations. But either way you measure growth last year, it was still slower than 2023.
- By one measure, annual growth increased 2.8% in 2024, a small dip relative to the 2.9% in 2023.
The big picture: The Federal Reserve took measures to loosen its grip on the economy in the second half of the year. The central bank cut rates by a full percentage point as inflation receded and the unemployment rate inched up.
- Since the Fed's initial interest rate cut, conditions have reversed. Progress on inflation has slowed and the labor market has bounced back.
- That is a key reason the Fed kept interest rates unchanged on Wednesday. Fed chair Jerome Powell said the economy was healthy and the central bank could afford to take its time in deciding its next move.
- "We see things as in a really good place for policy and for the economy," Powell told reporters at a news conference. "We feel like we don't need to be in a hurry to make any adjustments."
What to watch: Fed officials and some economists caution that huge uncertainty about Trump's policies — tax, trade and immigration — make it difficult to forecast how the economy may fare in the months ahead.
Go deeper: About that 2022 "technical recession"
Editor's note: This story has been updated with details on the GDP report.
