U.S. Economy Grows 2.3% in Late 2024 as Consumer Spending Drives Expansion

Featured & Cover U S Economy Grows 2 3% in Late 2024 as Consumer Spending Drives Expansion

The U.S. economy continued its steady growth in the final months of 2024, fueled by strong consumer spending. According to a report from the Commerce Department released on Thursday, the nation’s gross domestic product (GDP) expanded at an annual rate of 2.3% in October, November, and December. This marks a slight decline from the third quarter when GDP grew at a 3.1% annual pace.

Americans increased their spending on both goods and services in the last quarter, with purchases of big-ticket items surging at an annual rate exceeding 12%. This uptick in consumer activity may have been influenced by concerns over potential tariffs, as President Trump has threatened to impose new trade barriers.

“The consumer is driving the economic train,” said Mark Zandi, chief economist at Moody’s Analytics. “The economy is creating a boatload of jobs and unemployment is low,” which has provided people with the financial security to continue spending.

However, business investment did not keep pace with consumer spending, experiencing a decline during the quarter.

By the end of 2024, the U.S. economy had expanded by 2.5% compared to the final months of 2023, a stronger performance than most other major economies. In contrast, GDP growth in Europe remained stagnant throughout the year.

The strong economy was also supported by rising stock market gains and record-high home values, which contributed to consumer confidence—particularly among wealthier individuals.

“When they feel wealthy, they feel confident and they save a little bit less and spend a little bit more,” Zandi explained. “The real juice here is coming from folks who are in good financial shape. Lower-income households, they’re still struggling.”

Despite the solid growth, economic forecasters have expressed concerns about the sustainability of this momentum in 2025.

“The biggest risk to our 2025 forecast is an immediate imposition of across-the-board tariffs on key trading partners,” wrote Bernard Yaros of Oxford Economics in a research note.

Yaros estimated that if Trump proceeds with his plan to levy tariffs on imports from Canada, Mexico, and China, it could reduce GDP growth by over 1% this year.

While consumer spending remains strong, anxiety about the broader economy persists. A report from the Conference Board released this week indicated that consumer confidence declined to its lowest level in four months in January.

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