The U.S. economy likely grew at a slower pace in the fourth quarter of 2024, with GDP estimated to have risen at an annualized rate of 2.6%. A surge in imports, driven by businesses front-loading goods ahead of anticipated tariffs and a port strike, widened the trade deficit, dragging down overall economic growth. Meanwhile, strong consumer spending—fueled by a resilient labor market—helped support economic activity, though inflationary pressures remain a concern.
Disruptions in business spending, particularly due to a Boeing strike affecting aircraft production, also weighed on economic growth. Despite this, investments in intellectual property and artificial intelligence-related sectors remained strong. The Federal Reserve has maintained interest rates but has reduced its expected rate cuts for 2025 from four to two, citing economic uncertainties tied to fiscal, trade, and immigration policies under the new Trump administration.
Looking ahead, analysts anticipate further economic disruptions from proposed tariffs, tax cuts, and stricter immigration policies, which could drive inflation higher. While consumer spending remains robust, higher costs and supply chain challenges may slow economic momentum in the second half of 2025. The administration’s plans for government spending cuts also add uncertainty to the economic outlook, leaving experts divided on the long-term impact.
Source: REUTERS