Strong economy but inflation hard to tame! The US Q4 GDP grew steadily by 2.3%, and core PCE was unexpectedly revised up
The U.S. economy is expected to grow steadily at an annualized rate of 2.3% by the end of 2024, with consumer spending increasing by 4.2%. However, the core PCE price index was unexpectedly revised up to 2.7%, indicating stubborn inflation. Despite high interest rates and rising living costs putting pressure on low-income households, many Americans continue to benefit from wage growth and job opportunities. GDP growth is projected to be 2.3% in 2024, as slowing job growth suppresses consumer demand. Business investment is weak, with equipment spending declining by 9%
According to the Zhitong Finance APP, by the end of 2024, the U.S. economy is growing at a steady pace, but inflation is more stubborn than initially estimated at the end of 2024.
Data released by the Bureau of Economic Analysis on Thursday showed that the annualized revision of real GDP in the fourth quarter increased by 2.3% quarter-on-quarter, consistent with the initial estimate. The main growth engine of the economy—consumer spending—grew at a rate of 4.2%.
The Federal Reserve's preferred measure—the Personal Consumption Expenditures Price Index (PCE), excluding food and energy—rose by 2.7%, faster than the initially reported 2.5%. The PCE report for January, scheduled for release on Friday, is expected to show a year-on-year increase of 2.6% in the core measure.
The report indicates that the U.S. economy continues to maintain robust growth supported by strong consumer spending. Although high interest rates and rising living costs have put greater pressure on low-income households, many Americans are benefiting from healthy wage growth and job opportunities.
However, the outlook for the world's largest economy is becoming more bleak. After a growth of 2.8% in 2024, GDP is expected to grow by 2.3% this year, as slowing job growth suppresses consumer demand. Additionally, due to persistent inflation, Federal Reserve policymakers are cautious about future interest rate cuts.
Monthly data released on Friday is expected to show that inflation-adjusted personal spending has experienced its first decline in a year following a strong holiday shopping season.
In addition to household demand, the report also shows that business investment is weaker than initially reported. Equipment spending, after annualized revision, decreased by 9%, while the value of intellectual property products remained virtually unchanged