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The US economy grew at a rate of 2.3% in the fourth quarter, growing in line with previous reading and economists' expectations.
The Department of Commerce's Economic Analysis Bureau (BEA) announced on Thursday the first revision of its fourth quarter Gross Domestic Product (GDP) estimates.
Economists surveyed by LSEG expected the economy to grow at a 2.3% rate in the quarter. Economists were hoping for growth of 2.6% at the time, but the preliminary estimate for BEA for the quarter released last month was also 2.3%.
GDP growth slowed in the fourth quarter, compared to the fourth quarter, with a growth of 3.1%. BEA said the fourth quarter slowdown was primarily due to a slump in investment and exports, partially offset by accelerated consumer spending, but imports fell.
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Consumer spending rose 4.2% in the fourth quarter, with both services and products increasing. This was up from 3.7% in the third quarter and 2.8% in the second quarter.
Government spending increased at a faster pace than initially estimated. It was up 2.9% in the fourth quarter, slower than the 5.1% increase in the third quarter, but significantly higher than the initial 2.5% estimate.
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Business investment fell 5.7% in the fourth quarter, down from its initial estimate of 5.6%. It was relatively flat in the third quarter, which grew by 0.8%. In the last quarter, investment in equipment fell 9%, while investment in structures immersed 3.2%.
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Disposable personal income increased 2.5% last quarter, slightly below the initial estimate of 2.8%, but was a greater profit than the previous two quarters.
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According to the Commerce Department, the US economy rose 2.3% in the fourth quarter of 2024. (Getty Images/Eric Sayer via Getty Images/Bloomberg)
Personal savings as a share of disposable income continued to decline over the course of 2024 after a 3.8% read in the fourth quarter and a 5.4% read in the first quarter.
“While the fourth quarter GDP revisions look good, the downward revision of actual business equipment spending provides a warning that policy uncertainty could be a greater issue in H1 than expected.”
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“Business equipment spending is one of the most sensitive components of GDP to changing policy uncertainty, with no post-election reprieve of uncertainty, particularly due to trade,” Sweet added.
