US Economy Ends 2024 With 2.3% GDP Growth, Boosted By Consumer

The US economy expanded at a solid pace at the end of 2024, fueled by a generous tailwind from consumer spending that more than offset drags from a strike at Boeing Co. and much leaner inventory investment.

Inflation-adjusted gross domestic product increased an annualised 2.3% in the fourth quarter after rising 3.1% in the prior three-month period, according to the government’s initial estimate published Thursday. The median forecast in a Bloomberg survey of economists called for a 2.6% growth.

Consumer spending, which comprises the largest share of economic activity, advanced at a 4.2% pace — the first time since late 2021 that outlays have exceeded 3% in consecutive quarters. The acceleration was led by a pickup in motor vehicle sales.

At the same time, a closely watched measure of underlying inflation rose 2.5%, marking only the second quarterly acceleration since late 2022, the Bureau of Economic Analysis data showed. December inflation and spending figures are due Friday.

US stock index futures remained higher while Treasuries pared gains and the dollar pared losses.

The GDP figures cap another solid year for the world’s largest economy that defied expectations for a marked slowdown as consumers hung tough in the face of persistent inflation and high borrowing costs. That helps explain why the Federal Reserve is taking a more measured approach to future interest-rate cuts.

Chair Jerome Powell, speaking after the central bank held rates steady on Wednesday, said policymakers are waiting to see further progress on inflation and “do not need to be in a hurry to adjust our policy stance.”

He also said the economy is strong, which was further corroborated by the GDP report. A measure of underlying growth trends favored by economists that includes consumer spending and business investment, known as final sales to private domestic purchasers, advanced at a robust 3.2% pace.