News

Real GDP grew at an annual rate of 2.3% in the fourth quarter of 2024, down from 3.1% in the third quarter and below consensus expectations. Growth during the quarter was driven primarily by increases in consumer spending and government spending, which were offset partially by a decrease in investment. Real GDP increased 2.8% in 2024, down slightly from the 2.9% increase in 2023.

Consumer spending grew at an annual rate of 4.2%, with both spending on goods (up 6.6%) and services (up 3.1%) contributing to the gain. Consumer spending on durable goods, led by recreational goods and vehicles as well as motor vehicles and parts spending, showed significant growth at 12.1%. Meanwhile, consumer spending on nondurable goods rose 3.8%. Within services, spending on health care was the largest contributor to the increase. The rise in federal government spending (up 3.2%) was led by defense spending (up 3.3%).

The deceleration in real GDP primarily came from a downturn in investment (down 5.6%) and a decrease in exports (down 0.8%) in the fourth quarter. Business spending on equipment exhibited the largest drop in the fourth quarter (down 7.8%), while investment in structures also declined (down 1.1%).