Associated Press Economics Writer Paul Wiseman
WASHINGTON (AP) — The US economy said it had not changed its initial estimate of fourth quarter growth in the last three months of 2024, supported by a year-end consumer spending explosion.
The outlook for 2025 is clouded as President Donald Trump pursues a trade war, cuts in the federal workforce and massive deportation.
The Commerce Department reported Thursday that GDP (production of national goods and services) had slowed from a 3.1% pace between July and September 2024.
All of last year saw an economy 2.8% increase compared to 2.9% in 2023.
Consumer spending progressed at a 4.2% rate from October to December.
The report shows that Trump inherited a healthy economy when he took office last month. Growth has surpassed 2% in nine of the last 10 quarters. Unemployment rates are low at 4%, and inflation fell from its hit high in mid-2022.
After cutting benchmark rates three times in the past four months of 2024, the Federal Reserve has not changed in January and appears to be in a hurry to start cutting again. Progress on inflation has been stagnating in recent months. At 3% in January, consumer prices rose 9.1% year-on-year in June 2022, but exceeded the Fed’s 2% target.
President Donald Trump’s plan to impose tax imports on a scale not seen since the 1930s risks raising prices and strengthening inflationary pressures. As Trump has promised, deporting millions of immigrants who illegally work within the country could also create a labor shortage that boosts wages and acquires feed inflation.
Thursday’s GDP report was the second report for three commerce departments, looking at economic growth in the fourth quarter. The final estimate will be announced on March 27th.
Original issue: February 27, 2025, 8:47am EST
