NEW YORK: 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.
Economists surveyed by Bloomberg projected the US government’s initial estimate of fourth-quarter gross domestic product (GDP) – the sum of goods and services produced – to show an annualised 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 (Fed) 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 signalled just two interest rate cuts this year.
The GDP data are projected to show personal consumption of goods and services exceeded a 3% annualised pace for a second straight quarter, fuelled by a strong labor market.
That helps to explain how the United States continues to outperform advanced economies in Europe and around the world.
In contrast to the United States, 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 eurozone, 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.
“While loan-delinquency rates have been rising, especially for lower income households, wealthier households that account for about 40% of consumer spending in the country have benefited from the equity market rally and asset appreciation,” said economist Anna Wong.
“We’ve taken that signal onboard in our 2025 consumption forecast, and now expect spending to slow more gradually than we previously did.”
Looking north, the Bank of Canada is expected to slash rates by 25 basis points tomorrow.
That would be a slowdown after two consecutive 50-basis-point (bp) cuts and at a time when American tariff threats are generating considerable uncertainty.
GDP data for November and a flash estimate for December will show the impact of the US election and Prime Minister Justin Trudeau’s sales tax holiday on the economy.
Elsewhere, rate cuts in the eurozone and Sweden and a 100-bp hike in Brazil are among the expected highlights. — Bloomberg
