U.S. Economy Sees 2.4% Growth in Q4 2024 Amid Rising Consumer Spending

2025-03-28 economy

United States, Thursday, 27 March 2025.
In Q4 2024, the U.S. economy grew at a 2.4% annual rate, driven by a surge in consumer spending. Despite trade tensions, consumer confidence remained resilient.

Strong Consumer Spending Drives Growth

The U.S. Bureau of Economic Analysis’s third estimate revealed that consumer spending rose at a robust 4% pace in the fourth quarter, marking the biggest gain since Q1 2023 [1]. The expansion was broad-based, with spending increasing across both goods (6.2%) and services (3%) sectors [2]. This consumer resilience contributed significantly to the overall GDP growth, which was revised upward from the previous estimate of 2.3% to 2.4% [3].

Corporate Profits Show Resilience

Corporate profits demonstrated remarkable strength in Q4 2024, increasing by 5.9% to reach $3.312 trillion, rebounding from a 0.4% decline in the third quarter [4]. Undistributed profits notably surged by 15.1%, while net dividends rose by 0.5% [4]. This corporate performance suggests underlying economic strength, though future growth faces potential headwinds.

Trade and Government Contribution

The revision to 2.4% GDP growth reflected several key factors, including a larger contribution from net trade. Exports declined less than initially estimated (-0.2%), while imports fell more significantly (-1.9%), resulting in a positive contribution to GDP of 0.26 percentage points [2]. Government expenditure increased by 3.1%, showing stronger public sector activity [2]. For the full year 2024, the economy grew by 2.8%, slightly below the 2.9% recorded in 2023 [5].

Future Economic Outlook

Looking ahead, Deloitte’s baseline scenario projects U.S. GDP growth of 2.6% in 2025 and 2.1% in 2026 [6]. However, several challenges loom on the horizon, including potential impacts from new trade policies and federal spending adjustments. The Federal Reserve’s preferred inflation gauge, the PCE price index, rose at an annual rate of 2.4% in Q4 2024, exceeding the central bank’s 2% target [7], suggesting continued inflationary pressures that may influence future monetary policy decisions.

Sources

U.S. economy GDP growth