Financial markets dismissed fourth-quarter numbers and look toward first-quarter data.
New government data show that the U.S. economy slowed in the fourth quarter but still finished 2024 on a solid footing.
According to the Bureau of Economic Analysis’s third estimate for the fourth quarter of last year, the GDP growth rate was 2.4 percent, down from the previous quarter’s 3.1 percent.
The consensus forecast indicated a 2.3 percent reading for the October–December period. The last estimate was also revised 0.1 percent higher for the final three months of 2024.
Last quarter’s expansion was fueled mainly by increases in consumer spending and government expenditures, which partly offset the decline in investment.
Consumer spending surged by 4 percent, reflecting a 6.2 percent jump in goods and a 3 percent gain in services.
Government consumption climbed by 3.1 percent. Federal outlays rose by 4 percent, and state and local expenditures increased by 2.5 percent.
Commerce Secretary Howard Lutnick has suggested that government spending might no longer be included in future GDP reports.
“You know that governments historically have messed with GDP,” Lutnick said in an interview with Fox News’s “Sunday Morning Futures” earlier this month. “They count government spending as part of GDP. So I’m going to separate those two and make it transparent.”
Exports and imports slipped by 0.2 percent and 1.9 percent, respectively.
On the price front, inflationary pressures were elevated in the fourth quarter.
The GDP price index—a gauge of changes in prices of goods and services produced in the country—advanced by 2.3 percent, up from 1.9 percent in the third quarter. However, this was below the market estimate of 2.4 percent.
Personal consumption expenditure (PCE) prices rose by 2.4 percent, up from 1.5 percent. Core PCE, which omits the volatile energy and food categories, swelled at a slightly lower-than-expected pace of 2.6 percent.
Little Reaction on Wall Street
The fourth-quarter GDP report offered little excitement in the U.S. stock market on March 27.
Following the economic data, leading benchmark averages were flat in pre-market trading, struggling to rebound after President Donald Trump announced 25 percent tariffs on foreign automobiles on March 26.
U.S. Treasury yields were mixed, with long-term bonds driving the gains. The benchmark 10-year yield firmed above 4.36 percent.
Investors shrugged off the data since it is backward-looking and provided little insight into the current economic landscape.
Many developments have occurred since the end of the fourth quarter, particularly on the trade front.
By Andrew Moran
