[Economics] The US economy grew by 2.8% in 2024

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The pace of expansion of gross domestic product slowed slightly in the last part of the year

 

The world's largest economy remained strong in the fourth quarter of 2024. Data released Thursday by the Bureau of Economic Analysis, part of the Department of Commerce, show that the US gross domestic product (GDP) grew at a quarterly rate of 0.6% (annualized 2.3%) in the last three months of the year. The US economy thus expanded by 2.8% in real terms for the year as a whole, making it the most dynamic of the major industrialized powers, the G7 member countries, and maintaining the strength of the previous year, when it grew by 2.9%.

The strongest quarter of growth was the third, with a quarterly rate of 0.8% (annualized 3.1%). The economy lost some dynamism in the fourth quarter as that rate dropped to 0.6%, but it still stands out among the major developed economies. Consumption remains the engine of growth, with quarterly growth of 1% (4.2% annualized), while investment fell in the fourth quarter. Exports also lost strength, but imports also fell. This is the first estimate, which will be followed by two revisions in the coming months.
Curiously, despite the fact that the US economy is the envy of the world, discontent and frustration over price increases and difficulties in accessing housing partly explain the increase in support for Donald Trump in the presidential elections in November. Although citizens notice the price increases at the gas pump and in the shopping cart, the economic situation in the country is far from the apocalyptic landscape that Trump painted.

Quite the opposite is true: the economy is growing strongly, jobs are being created consistently, the unemployment rate is close to its lowest level and inflation has been approaching the price stability objective of 2%, although it has not yet managed to reach that level. The soft landing continues, putting a lid on prices without causing a sharp rise in unemployment, much less a full-blown recession. Although Trump has declared an energy emergency, US oil production is at record levels.

“The economy is strong overall and has made significant progress toward our goals over the past two years,” said Federal Reserve Chairman Jerome Powell on Wednesday. “Labor market conditions have cooled and remain solid. Inflation has moved much closer to our long-term target of 2%, although it remains somewhat elevated,” he added.

“We feel that we are in a very good place. Monetary policy is well positioned. The economy is in a good place, actually, too. And what we expect is to see further progress against inflation,” he explained at the press conference in which the central bank decided to keep interest rates in the range of 4.25%-4.50% after three consecutive cuts since September.

Powell, however, pointed to the uncertainty surrounding possible economic policy measures taken by Trump himself. “As things stand, there is probably heightened uncertainty because of significant policy changes in four areas: tariffs, immigration, tax policy, and regulatory policy. So there is probably some additional uncertainty, but it should be temporary,” once the relevant decisions are made, he explained.

Link: https://elpais.com/economia/2025-01-30/la-economia-de-estados-unidos-crecio-un-28-en-2024.html