US economy grew 2.4% last quarter, faster than previous estimate
The GDP numbers were boosted by upward revisions to net exports, government spending and business investment
[WASHINGTON] The US economy expanded at a faster pace in the fourth quarter than previously estimated, while a key measure of inflation was revised lower.
Gross domestic product increased at a 2.4 per cent annualised rate in the October-to-December period, the third release of the figures from the Bureau of Economic Analysis showed on Thursday (Mar 27). The Federal Reserve’s preferred inflation metric – the personal consumption expenditures price index excluding food and energy – was revised down to 2.6 per cent.
The GDP numbers were boosted by upward revisions to net exports, government spending and business investment. Growth in consumer spending – which accounts for two-thirds of GDP – was marked lower to 4 per cent.
Economists generally anticipate slower growth in 2025 as consumers and businesses grow wary of President Donald Trump’s economic agenda. The administration’s aggressive trade policy prompted Fed officials last week to mark down their forecasts, and Wall Street giants including Goldman Sachs and Morgan Stanley have made similar changes.
The February PCE report, which will show the latest data on consumer spending and inflation, is due Friday.
The government’s other main gauge of economic activity – gross domestic income – rose 4.5 per cent after a 1.4 per cent increase in the third quarter. While GDP measures spending on goods and services, GDI measures income generated and costs incurred from producing them. The average of the two growth measures last quarter was 3.5 per cent, the most in a year.
The GDI data include figures on corporate profits. After-tax profits rose 5.9 per cent in the fourth quarter, the most in more than two years. Profits as a share of gross value added for non-financial corporations, a measure of aggregate profit margins, widened to 15.9 per cent.
Separate reports on Thursday showed initial applications for unemployment benefits were little changed at 224,000 last week, while the trade deficit narrowed in February from January’s record high. BLOOMBERG
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