U.S. economy ends 2024 with solid growth, up 2.8 percent for full year

WASHINGTON (AP) — The American economy ended 2024 on a solid note with consumer spending continuing to drive growth.

The Commerce Department reported Thursday that gross domestic product — the economy’s output of goods and services — expanded at a 2.3 percent annual rate from October through December.

For the full year, the economy grew a healthy 2.8 percent, compared with 2.9 percent in 2023.

The fourth-quarter growth was a tick below the 2.4 percent economists had expected, according to a survey of forecasters by the data firm FactSet.

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Consumer spending grew at a 4.2 percent pace, fastest since January-March 2023 and up from 3.7 percent in July-September last year. But business investment tumbled as investment in equipment plunged after two straight strong quarters.

Wednesday’s report also showed persistent inflationary pressure at the end of the 2024. The Federal Reserve’s favored inflation gauge — called the personal consumption expenditures index, or PCE — rose at a 2.3 percent annual pace last quarter, up from 1.5 percent in the third quarter. Excluding volatile food and energy prices, so-called core PCE inflation was 2.5 percent, up from 2.2 percent in the July-September quarter.

Within the GDP data, a category that measures the economy’s underlying strength rose at a healthy 3.2 percent annual rate from July through September, slipping from 3.4 percent in the third quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.

President Donald Trump has inherited a healthy economy. Growth has been steady and unemployment low — 4.1 percent in December.

On Wednesday, the Fed left its benchmark interest rate unchanged after making three cuts since September. With the economy rolling along, Fed Chair Jerome Powell told reporters, “we do not need to be in a hurry” to make more cuts. The Fed is also cautious because progress against inflation has stalled in recent months after falling from four-decade highs hit in mid-2022.

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The European Central Bank cut its benchmark rate by a quarter point Thursday, underlining the contrast between more robust growth in the U.S. economy and stagnation in Europe, which recorded zero growth at the end of last year.

The U.S. economic outlook has become more cloudy, however. Trump has promised to cut taxes and ease regulations on business, which could speed GDP growth. But his plan to impose big taxes on imports and to deport millions of immigrants working in the United States illegally could mean slower growth and higher prices.