The U.S. economy showed resilience with a 2.4% growth in the final quarter of 2024, buoyed by robust consumer spending, according to the latest report from the Commerce Department. This figure marks a slight increase from previous estimates, reflecting a surge in year-end consumer expenditures despite a slowdown in business investment, particularly in equipment.

Throughout 2024, the economy expanded by 2.8%, slightly lower than the previous year's 2.9%. Consumer spending notably increased by 4%, outpacing the third-quarter growth of 3.7%, while business investments declined sharply by 8.7%. The reduction in business inventories also contributed negatively to GDP growth by 0.84 percentage points.

However, underlying indicators of economic strength, excluding volatile components like exports and government spending, rose by 2.9% annually in Q4, slightly lower than earlier projections. Inflation pressures persisted, with the PCE price index rising at an annual rate of 2.4%, exceeding the Federal Reserve's target of 2%. Core PCE inflation, excluding food and energy, increased to 2.6% from 2.2% in the previous quarter.

The report underscores mounting uncertainties ahead. President Donald Trump's policies, including new tariffs on imports such as a 25% tax on foreign autos, pose risks of higher inflation and disrupted investment flows. Analysts, including Ryan Sweet from Oxford Economics, caution that these policy shifts and tightening financial conditions could dampen growth prospects in the coming quarters.

Furthermore, consumer confidence is declining sharply due to concerns over tariffs and inflation, leading major retailers to lower their expectations for the year amid signs of reduced consumer spending.

This final revision of fourth-quarter GDP offers a snapshot of the economy before recent policy uncertainties took hold, suggesting a more challenging economic landscape in early 2025.