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Highlights:
- US economy grew at a slower pace in the fourth quarter of 2024, missing market estimates.
- GDP expanded by 2.3% during the final three months of the year.
- Wall Street futures showed mixed movement, with the S&P 500 and Nasdaq higher, but Dow Jones lower.
The US economy experienced slower growth in the final quarter of 2024 compared to the previous three months, according to new data from the Bureau of Economic Analysis. The country’s gross domestic product (GDP) increased by 2.3% in the fourth quarter, marking a decline from the previous quarter's growth of 3.1%.
This latest GDP reading fell in line with economists’ expectations, who had also anticipated a growth rate of 2.3% for the period. Despite the slowdown, the economy continued to show expansion, even if at a more moderate pace than earlier in the year.
Economic Growth and Market Sentiment
The slowdown in economic growth comes as markets were already factoring in a more stable and measured expansion. In particular, the S&P 500 and Nasdaq showed positive movement, indicating continued investor confidence, though the Dow Jones lagged behind, signaling some divergence in market sentiment across different sectors.
The slower economic growth may reflect a range of factors, including global challenges, domestic policy shifts, and changes in consumer spending. It underscores how different segments of the economy may be responding to varying pressures, from rising interest rates to shifts in consumer demand.
Sector Performance and Consumer Spending
Consumer spending, a major component of the economy, continued to support growth, although at a slower rate than earlier in the year. The fourth-quarter expansion reflects resilient demand in certain areas, despite growing concerns about inflation and higher borrowing costs.
Meanwhile, business investments also showed signs of slowing, which could be a result of caution due to broader economic conditions. The overall growth rate highlights the ongoing resilience of key sectors while showcasing the broader challenges that still exist.
Corporate Earnings Amid Economic Shifts
Corporate earnings reports will be closely watched in the coming months to gauge the ongoing health of businesses amid shifting economic dynamics. Companies with exposure to global markets, as well as those in consumer-facing sectors, may face different challenges depending on how broader economic conditions evolve. The upcoming earnings season will likely provide additional context on how firms are navigating this slower growth period.
Global Factors and Future Projections
International developments also played a role in the slower growth rate. With global trade facing uncertainty and geopolitical tensions impacting various regions, the US economy's performance has been influenced by outside factors. These elements could continue to affect economic indicators in the near term.
