U.S. GDP growth in the fourth quarter was 2.3%, lower than expected, but consumer spending remained strong

According to the Zhitong Finance APP, the U.S. economic growth slowed in the fourth quarter, but strong domestic demand may lead the Federal Reserve to continue its gradual rate-cutting path this year. The GDP estimate report released by the U.S. Department of Commerce's Bureau of Economic Analysis on Thursday showed that the annualized quarter-on-quarter preliminary growth of U.S. Gross Domestic Product (GDP) in the last quarter was 2.3%, lower than the expected 2.6%, while the growth in the third quarter was 3.1%. The annualized quarter-on-quarter preliminary growth of the GDP price index in the fourth quarter was 2.2%, below the expected 2.5%, with the previous value at 1.9%. The GDP growth rate for the entire year of 2024 is projected to be 2.8%, slightly lower than the 2.9% in 2023. Consumer spending, which accounts for more than two-thirds of total U.S. economic activity, continued to grow strongly in the fourth quarter. The annualized quarter-on-quarter preliminary growth of Personal Consumption Expenditures (PCE) in the fourth quarter was 4.2%, higher than the expected 3.2%, with the previous value at 3.7%. The annualized quarter-on-quarter preliminary growth of the core PCE price index in the fourth quarter was 2.5%, in line with expectations, with the previous value at 2.2%. Previously, data released on Wednesday showed that the trade deficit in goods rose to a record high in December, prompting the Atlanta Federal Reserve Bank to lower its GDP growth forecast for the U.S. from 3.2% to 2.3%. Despite the slowdown compared to the rapid growth in the third quarter, the U.S. economy withstood dire recession predictions last year. These predictions were exacerbated by the Federal Reserve raising interest rates by 5.25% in 2022 and 2023 to curb inflation. Currently, the rate of economic expansion remains above the non-inflation growth rate of 1.8% viewed by policymakers. Dissatisfaction with the economy was a significant reason for President Donald Trump's overwhelming victory in the November 5 election. The Federal Reserve maintained the benchmark overnight interest rate in the range of 4.25%-4.50% on Wednesday, having already lowered it by 100 basis points since last September. In its policy statement, it removed the phrase that inflation had "made progress" (i.e., moving towards the Federal Reserve's 2% target). Federal Reserve Chairman Jerome Powell told reporters that the U.S. economy is "generally strong." The Federal Reserve expects to cut rates only twice this year, down from the four times anticipated when the policy easing cycle began last September. This reflects the uncertainty regarding the impact of Trump's new administration's fiscal, trade, and immigration policies on the economy. Economists believe that planned tax cuts, widespread import tariffs, and mass deportations of illegal immigrants will lead to inflation. They expect economic growth to slow and inflation to rise in the second half of the year. Due to expectations of tariff implementation and the possibility of port strikes, businesses concentrated on importing goods in advance in November and December 2024, leading to a significant expansion of the trade deficit. Most imported goods were also quickly purchased by consumers, as consumers also made precautionary purchases before the tariffs took effect