- The US economy grew more slowly in the fourth quarter of 2024.
- Real GDP increased at an annualized rate of 2.3%, below the forecast of 2.7%.
- Economists think the economy was strong in 2024 and the chance of a recession in 2025 is low.
US real gross domestic product increased at an annualized rate of 2.3% in the fourth quarter of this past year, less than the forecast of 2.7%.
That economic growth was well below expectations and shows a cooler economy than the second and third quarter of the year.
Matt Colyar, an economist for Moody’s Analytics, told Business Insider before the new GDP data was published by the Bureau of Economic Analysis that the 2024 economy was strong.
“Inflation is still above the Fed’s target but moderated throughout the year, and this happened without any meaningful increase in joblessness,” Colyar said. “The increase in the unemployment rate was driven by an increase in labor supply. This helped ease some of the inflationary pressure coming from the labor market via wage growth.”
Average monthly job growth was 186,000 in 2024, personal spending continued to climb, and a recession was avoided.
While it’s still early in the year and President Donald Trump’s second administration has just begun, Elizabeth Renter, senior economist at NerdWallet, said the risk of a recession this year is low.
“The issue is there is much we don’t know right now about how the year will unfold,” Renter said in a statement to Business Insider. “Some potential policies, such as tariffs, stand to be inflationary. Others, such as those that could reduce the workforce, may slow economic growth. Most potential economic policies will take time to implement, and even more time to influence the economy, so my outlook for the 2025 economy remains on solid footing.”
Colyar said Moody’s Analytics expected cooler GDP growth this year.
“We expect growth slows closer to 2% in 2025 and is a little bit stronger than that in the first quarter,” Colyar said. “That’s not a concerning number. Consumers have grappled with higher inflation and there are some budding signs that people are pulling back.”
This is a developing story. Please check back for updates.
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