The American economy just had another robust year

Washington CNN –

Another year of solid economic growth is in books, stressing how Biden administration has given President Donald Trump what many consider a solid economy.

The American economy increased by 2.5% in the past year, according to new figures from the trade department published Thursday, comparing the fourth quarter in 2024 with that of a year earlier. A resilient labor market supported strong consumption expenditure last year. American spending represents around 70% of the US economy. Commercial investment also fueled growth in 2024, although it was reversed in the last months of the year.

The economy extended to an annualized rate of 2.3% in the fourth quarter, measured by the gross domestic product, the widest measure of economic production. It was slightly below the expectations of economists at a rate of 2.4%, according to FostSet. The figures are adjusted for seasonal oscillations and inflation.

GDP data in the fourth quarter closed an surprisingly solid year in 2024, Ellen Zentner, chief economic strategist of Morgan Stanley Wealth Management, said in comments published Thursday. The American consumer was unstoppable, supported by the creation of wealth, a strong labor market and loans.

The latest GDP report occurs on the heels of the last policy of federal reserves announced on Wednesday. The central bank has chosen to hold its stable key interest rate, after three consecutive drops in rate last year.

While Fed officials seem inclined to keep new rate drops for the coming months, the president of the Fed, Jerome Powell, at her press conference after the meeting to slow down. He also noted that the strong numbers in the aggregate mask economic pain under the surface.

Economists expect the US economy to continue with its expansion in 2025, but the only Joker is the economic effect of Trumps policies, which include mass deportations, rigorous prices and rendering its tax reductions in 2017 permanent.

Consumers have intensified their expenses during the period from October to December, strengthening the overall economy of the process.

Consumer spending accelerated at an annual rate of 4.2% in the fourth quarter, against the previous quarters of 3.7%. Expenses both in goods and services have won this period, in particular the purchases of sustainables, which recorded a superb rate of 12.1%.

Supporting expenses on sustainable product products intended to last at least three years, such as furniture and cars, may be due to the scrambling of buyers to get ahead of the rigorous rates that Trump has floated. The president promised to slap 25% of prices on the goods of Mexico and Canada on February 1, a decision that could make devices and cars more expensive.

Consumers may also have been encouraged to break sustainable due to short-term interest rates.

However, commercial expenses were a large red flag in the latest GDP report.

The non -residential fixed investment, which captures the amount of companies investing in their operations, contracted at an annual rate of 2.2% in the fourth quarter, decreasing sharply compared to the gain of 4% in the period of three previous months.

The only trail was that companies had not invested in stocks as much as expected, which could be a reaction to economic uncertainty surrounding the new presidential administration, Robert Frick, business economist of Navy Federal Credit Union, in A ticket Thursday.

Trump begins his second term with an American economy in very good shape, but he has also promised major policy changes.

With regard to prospects, President Trump seeks to create a low tax and light regulatory environment in order to stimulate growth prospects while implementing prices to improve the competitiveness of the United States and promote the reshoring of the Economic activity, James Knightley, international economist in chief at Chez Chez at a note Thursday in a note. All this should be favorable to economic activity, but at the same time, there is evidence of a cooling job market and the growth of nominal income slows in particular.

Trump also launched an aggressive repression against immigration, which, according to economists, could weigh on growth and put employers who count on migrant labor in a link.

There are many concerns concerning economic growth this year, but a fear is that prevailing on expansionary policies, aimed at stimulating economic activity, could end up catching inflation. If this turns out to be the case, not only would it sting the everyday Americans who have already treated years of high inflation, but it could also prevent the Fed from reducing rates, and perhaps raising them to the place.

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