Economic growth slowed more than expected to close out 2024. The U.S. economy grew at an annualized rate of 2.3% in Q4 2024, according to the advance estimate from the Bureau of Economic Analysis—slower than the 2.5% economists expected and down from 3.1% in Q3.
- The slowdown comes as consumer and government spending propped up growth, while investment declined.
- This report adds to signs of a cooling economy, with durable goods orders and consumer confidence also slipping.
Good News: For the full year, GDP rose 2.5%, far surpassing early-year forecasts. One bright spot was the housing market, which rebounded with a 5.3% jump in residential investment, as falling mortgage rates spurred construction.
- Despite the slowdown, economists note that while growth is slowing, the economy remains resilient. A strong labor market and steady consumer spending could help prevent a deeper downturn, but much depends on whether inflation continues easing and the Federal Reserve holds interest rates steady.
Bottom Line: All evidence is pointing to a slowing economy in 2025 which could be good for rates.