Keep knowledgeable with free updates
Merely signal as much as the US financial system myFT Digest — delivered on to your inbox.
The US financial system grew at an annualised fee of two.3 per cent within the fourth quarter, a weaker than anticipated finish to a yr dominated by the resilience of American customers.
Thursday’s GDP determine from the Bureau of Financial Evaluation in contrast with the two.6 per cent anticipated by economists polled by Bloomberg and three.1 per cent within the third quarter.
The report comes a day after the Federal Reserve held rates of interest, with chair Jay Powell saying the energy of the financial system meant the central financial institution didn’t should be “in a rush” to chop borrowing prices.
Shopper spending powered a big portion of the expansion on the planet’s largest financial system within the fourth quarter, with authorities expenditures additionally boosting the figures, the BEA mentioned. A decline in funding partially offset the rise.
“It’s actually necessary to see the acceleration in client spending, notably on big-ticket gadgets — car gross sales went to their highest stage since Might 2021,” mentioned Diane Swonk, chief economist at KPMG US, who added that “a banner journey season” had contributed to companies spending.
The US financial system expanded 2.8 per cent for the entire of 2024, on a par with the two.9 per cent recorded in 2023.
Bernard Yaros, lead US economist at analysis agency Oxford Economics, mentioned the slowdown in development within the fourth quarter was unlikely to final. “The weak spot on the funding facet was attributable largely to payback from an unsustainable growth in plane funding earlier this yr,” Yaros mentioned.
The IMF expects the US financial system to proceed to outpace friends in Europe, Canada and Japan this yr. President Donald Trump’s pledge to chop taxes has raised expectations that US development will stay sturdy.
However some economists are involved that if Trump sparks a commerce conflict with tariffs on buying and selling companions, it may wipe out a few of these anticipated beneficial properties.
“The most important threat to our 2025 forecast is an instantaneous imposition of across-the-board tariffs on key buying and selling companions,” mentioned Yaros, including {that a} 25 per cent levy on Canada and Mexico, plus further tariffs on China, would dent development by 1.2 share factors.
US authorities bonds have been broadly regular following the info, with the two-year yield 0.02 share factors decrease at 4.21 per cent, whereas the benchmark 10-year yield was down 0.04 share factors at 4.52 per cent.
US shares rose in early New York buying and selling, with the S&P 500 gaining 0.5 per cent and the tech-heavy Nasdaq Composite additionally advancing 0.6 per cent.
