The U.S. economy demonstrated strong performance in 2024, concluding the year with a gross domestic product (GDP) growth of 2.8%, slightly down from 2.9% in 2023. According to the Commerce Department, the fourth quarter saw an annualized growth rate of 2.3%, lower than the 2.4% predicted by economists.

Driving this growth was robust consumer spending, which surged at a 4.2% pace in the fourth quarter, marking the fastest increase since early 2023 and an improvement from 3.7% in the previous quarter. Analysts attribute this consumer activity to households making significant purchases in anticipation of potential price hikes resulting from anticipated import tariffs, as noted by Chief Economist Joe Brusuelas from RSM US. Consumers opted to stock up on durable goods, witnessing a remarkable 12% increase in such spending.

However, the economic expansion faced challenges, primarily from a decline in business investment. Spending on equipment fell sharply after benefiting from strong growth in preceding quarters. The gross domestic product report also highlighted persistent inflation pressures, as indicated by the personal consumption expenditures (PCE) price index rising by 2.3% in the fourth quarter, compared to 1.5% in the third. Core PCE inflation, which excludes volatile food and energy prices, rose to 2.5%, prompting ongoing concerns about inflation exceeding the Federal Reserve's target of 2%.

Despite these inflationary concerns, the overall outlook regarding consumer demand and the labor market remains robust, with unemployment holding steady at 4.1% as President Donald Trump takes office again. Fed Chair Jerome Powell stated that while the economy is strong, the central bank does not need to rush into additional interest rate cuts at this time.

The economic landscape could shift as the new Trump administration prepares to implement policies involving tax cuts and regulatory changes, which could potentially further influence growth in the near future. Analysts, however, caution that these policies may also bring inflationary repercussions, affecting consumers and overall economic activity.

For additional insights, read more from Reuters and India Times.