The growth of the US economy slowed in the last quarter, but capped another robust year of expansion, as Donald Trump pledges to lead a historic revival and bring down prices for millions of Americans.
Gross domestic product (GDP) – a broad measure of economic health – grew by 2.3% in the last three months of 2024, according to official data released on Thursday, down from the 3.1% rate of growth in the previous quarter.
The reading was short of the 2.6% growth in the fourth quarter expected by economists.
During his victorious campaign for the White House last year, Trump claimed the economy had been destroyed under Joe Biden. It was a top election issue, as many voters grappled with the higher cost of living.
But while inflation soared (and then fell back) in the years after Covid-19 first swept the world, US economic growth has remained remarkably robust. GDP grew by 2.8% last year, down from 2.9% in 2023, despite policymakers raising interest rates in an effort to bring down price growth.
Trump, now back in office, has promised to “rapidly” cut prices and boost manufacturing. But his key economic plans, built around tariffs on foreign imports, have prompted warnings from US firms and economists who fear tariffs would risk exacerbating inflation.
As it kept interest rates on hold on Wednesday, the US Federal Reserve said the economy had “continued to expand at a solid pace”, with unemployment levels stable and inflation “somewhat elevated”. Trump has publicly demanded rate cuts.
Jerome Powell, the central bank’s chairman, said Fed policymakers would be “watching carefully” as the Trump administration fleshed out new policies, to gauge their impact on the economy. This was “no different” from how the central bank has handled other new administrations, he stressed.
Samuel Tombs, chief US economist at Pantheon Macroeconomics, said the economy appeared to have been boosted towards the end of last year by households pulling forward purchases in anticipation of tariffs threatened by the incoming Trump administration.
“Economic growth became increasingly reliant on households last year,” he said, “with the 4.2% surge in consumers’ spending in [the fourth quarter] driving essentially all of the overall increase in GDP, offsetting a big drag from inventories and weakness in investment”.
