US GDP Grows 2.3 Percent in the Fourth Quarter of 2024
The GDP growth survives Hurricane Milton's impact as Trump presidency second term begins
U.S. GDP increased at an annual rate of 2.3 percent in Q4 2024, a Bureau of Economic Analysis report has said. The GDP rise in Q3 was 3.1 percent while it was 2.9 percent in the fourth quarter of 2023.
The price index for gross domestic purchases increased 2.2 percent while the Personal Consumption Expenditure (PCE) price index showed a 2.3 percent rise. Meanwhile, the PCE price index excluding food and energy increased by 2.5 percent, the Bureau of Economic Analysis said.
The real disposable personal income for the quarter increased 4.1 percent.
The decelerating growth is a challenge to the second president of Donald Trump who assumed office on January 20. The report says the decline was worsened by the impact of Hurricane Milton, which hit south of Tampa Bay, Florida on October 9, disrupting businesses and the retail industry.
Economy Shows Steady Growth
This growth reflects robust consumer and government spending, bolstered by a decline in imports which further supported domestic output. The economic expansion is an encouraging sign as the U.S. barrels forward into 2025, with policymakers maintaining a watchful eye on external economic factors.
Price Indexes Indicate Moderate Inflation
The price index for gross domestic purchases rose modestly by 2.2% in the fourth quarter, up slightly from the 1.9% increase observed in the previous quarter. This mild inflationary pressure was mirrored in the Personal Consumption Expenditures (PCE) price index, which saw an increase of 2.3%. More notably, the PCE price index excluding food and energy, often regarded as a core indicator of inflation, climbed by 2.5%. These figures suggest that while inflation remains controlled, it is crucial for the Federal Reserve to stay vigilant.
Corporate Profits Experience Notable Increase
Meanwhile, corporate profits experienced a marked increase in the fourth quarter, with a total rise of 3.2% from the prior quarter. This upsurge is indicative of healthy business margins and improved commercial activities across various sectors. This increase comes amid a backdrop of favorable macroeconomic conditions, driving enhanced shareholder returns while paving the way for further reinvestment and expansion opportunities for corporations.
Real Disposable Income and Personal Saving Rate Insights
Real disposable personal income reached $17,667.5 billion, reflecting a robust economic environment where individuals have more capital at their disposal after taxes. Additionally, the personal saving rate maintained a healthy level at 4.1%, showcasing the propensity of the U.S. populace to save amid uncertain economic forecasts. These metrics are essential for understanding consumer confidence and potential future consumption patterns, which are pivotal for sustained economic growth.
Current-Dollar Personal Income Trends Upward
Current-dollar personal income for the fourth quarter stood at $24,765.8 billion, showing a modest uptick as employment gains and wage hikes contributed positively. This uptick helps underpin not only consumer spending but also the general economic prosperity seen through the latter part of 2024. While external factors and geographic tensions remain potential disruptors, the domestic outlook appears increasingly resilient.
Source: Bureau of Economic Analysis
