US Economy Grows Slower Than Expected In Q4

The US economy grew at a slower-than-expected pace in the fourth quarter.

The Bureau of Economic Analysis’s advance estimate of fourth quarter US gross domestic product (GDP) showed the economy grew at an annualised pace of 2.3% during the period, below the 2.6% growth expected by economists. The reading came in lower than the 3.1% growth seen in the third quarter. Increases in consumer spending and government spending drove economic growth in the quarter while decreases in investment offset some gains. For the year, the US economy grew at 2.8% pace, slightly below the 2.9% number seen in 2023 but above the 2.5% growth seen in 2022.

“Growth in Q4 GDP was a touch slower than we expected and marked a slowdown from the pace in the prior two quarters,” Oxford Economics lead US economist Bernard Yaros wrote in a note to clients on Thursday. “However, the details argue against extrapolating too much from the step-down in Q4 growth, and we won’t make major forecast changes due to the report. “Meanwhile, the “core” Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 2.5% in the fourth quarter, in line with estimates and above the 2.2% seen in the prior quarter.

The data’s release comes as investors try to gauge if the Federal Reserve will start cutting interest rates again in 2025 after holding them steady on Wednesday. Powell said in a press conference that the economy “remains strong” while inflation “remains somewhat elevated.”

“We don’t need to be in a hurry to adjust our policy stance,” Fed Chair Powell said. Following Wednesday’s Fed meeting, markets see less than a 50% chance that the Fed cuts rates before its June meeting

Yahoo Finance

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