(Bloomberg) — The US economy remained at a comfortable cruising speed in the final stretch of 2024, powered by healthy consumer spending and creating even more separation from its global counterparts.
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Economists surveyed by Bloomberg project the government’s initial estimate of fourth quarter gross domestic product — the sum of goods and services produced — to show an annualized 2.7% increase. That would follow back-to-back quarters of about 3% growth.
Thursday’s report on US economic activity surfaces a day after the conclusion of the first Federal Reserve policy meeting of 2025. Against a backdrop of healthy demand and stubborn inflation, officials are widely expected to hold borrowing costs steady. At their December confab, policymakers signaled just two interest-rate cuts this year.
The GDP data are projected to show personal consumption of goods and services exceeded a 3% annualized pace for a second straight quarter, fueled by a strong labor market. That helps to explain how the US continues to outperform advanced economies in Europe and around the world.
In contrast to the US, figures in the coming week are predicted to reveal that the French economy stagnated in the closing months of 2024, as well as a slight contraction in Germany. Data on GDP in the broader euro area, also set for release on Thursday, are seen showing scant growth — extending a multi-year trend of sluggishness.
Monthly US household spending figures on Friday will likely point to momentum heading into 2025. Economists also expect the personal income and spending report to show a slight pickup in the Fed’s preferred inflation gauge from a month earlier.
What Bloomberg Economics Says:
“While loan-delinquency rates have been rising — especially for lower-income households — wealthier households that account for about 40% of consumer spending have benefited from the equity-market rally and asset appreciation. We’ve taken that signal onboard in our 2025 consumption forecast, and now expect spending to slow more gradually than we previously did.”
— Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins, economists. For full analysis, click here
Looking north, the Bank of Canada is expected to cut rates by 25 basis points on Wednesday, a slowdown after two consecutive 50 basis-point cuts at a time US President Donald Trump’s tariffs threats are generating considerable uncertainty.
