U.S. economy grew 2.8% in 2024

The American economy ended 2024 on a solid note, with consumer spending continuing to drive growth.

The U.S. Commerce Department reported Thursday that gross domestic product — the economy's output of goods and services — expanded at a 2.3 per cent annual rate from October through December.

For the full year, the U.S. economy grew 2.8 per cent, compared with 2.9 per cent in 2023.

The fourth-quarter growth was a tick below the 2.4 per cent economists had expected, according to a survey of forecasters by the data firm FactSet.

Consumer spending grew at a 4.2 per cent pace, the fastest since January-March 2023 and up from 3.7 per cent in July-September last year. But business investment tumbled, as investment in equipment plunged after two straight strong quarters.

Trump inherits low unemployment

Wednesday's report also showed persistent inflationary pressure at the end of 2024. The Federal Reserve's favoured inflation gauge — called the personal consumption expenditures index, or PCE — rose at a 2.3 per cent annual pace last quarter, up from 1.5 per cent in the third quarter. Excluding volatile food and energy prices, so-called core PCE inflation was 2.5 per cent, up from 2.2 per cent in the July-to-September quarter.

WATCH | Bank of Canada says it can't do much about the impact of tariffs: 

Bank of Canada cuts interest rate, warns it can't protect economy from tariffs

1 day ago

Duration 2:06

The Bank of Canada has cut its key interest rate another 25 basis points to three per cent as Governor Tiff Macklem warns there's little the central bank can do to negate the economic impact of U.S. tariffs imposed on Canadian imports.

President Donald Trump has inherited a healthy economy. Growth has been steady and unemployment low — 4.1 per cent in December.

U.S. Fed leaves interest rates unchanged

On Wednesday, the Fed left its benchmark interest rate unchanged after making three cuts since September. With the economy rolling along, Fed chair Jerome Powell told reporters, "we do not need to be in a hurry" to make more cuts.

The Fed is also cautious because progress against inflation has stalled in recent months after falling from four-decade highs in mid-2022.

The European Central Bank cut its benchmark rate by a quarter point on Thursday, underlining the contrast between more robust growth in the U.S. economy and stagnation in Europe, which recorded zero growth at the end of last year.

The U.S. economic outlook has become more cloudy, however. Trump has promised to cut taxes and ease regulations on business, which could speed GDP growth. But his plan to impose big taxes on imports and to deport millions of immigrants working in the United States illegally could mean slower growth and higher prices.