U.S. GDP Growth Is Weaker-than-Expected in Q4’24
by:Tom Moeller
|in:Economy in Brief
Summary
- Inventory subtraction is largest since Q1’23; net exports add minimally to growth.
- Consumer spending growth advances sharply; business investment declines.
- Price index growth picks up marginally.
Real GDP grew 2.3% (SAAR) last quarter following a 3.1% gain in the third quarter and 3.0% growth in Q2. The increase fell short of expectations for a 2.7% rise in the Action Economics Forecast Survey. Growth during the four quarters of 2024 fell to 2.5% from 3.2% in 2023.
Business inventories subtracted 0.93 percentage point from growth last quarter after subtracting 0.22 point from Q3 growth. It was the largest subtraction since Q1’23. Net exports added 0.04 percentage point to Q4 growth after subtracting 0.43 point in Q3. Exports eased 0.8% last quarter (+2.9% y/y) as imports also fell 0.8% (+5.8% y/y).
Private domestic final demand increased 3.1% (3.0% y/y) in Q4 after rising 3.7% in Q3. It was powered by a 4.2% surge (3.2% y/y) in personal consumption expenditures, following a 3.7% advance in Q3. Durable goods buying rose 12.0% (5.7% y/y) driven by motor vehicle as well as recreational goods purchases. Nondurable goods spending rose 3.8% (2.3% y/y) as clothing purchases surged. Services spending growth improved by 3.1% (3.0% y/y) reflecting strength in healthcare as well as financial services. Residential investment grew 5.3% (2.7% y/y) after declining for three straight quarters. Working lower, business fixed investment declined 2.2% (+2.5% y/y) as investment in structures & equipment both declined. Information processing equipment fell sharply but investment in intellectual property continued to strengthen.
Government spending rose 2.5% (3.1% y/y) last quarter after increasing 5.1% as federal government outlay growth remained firm with higher defense spending. State & local spending growth eased.
The GDP price index rose 2.2% (2.4% y/y) last quarter after a 1.9% Q3 gain. A 2.5% rise had been expected. The PCE price index moved up 2.3% (2.4% y/y) after a 1.5% rise. The price index less food & energy increased 2.5% (2.8% y/y). The business fixed investment price index rose 1.4% (2.0% y/y) and the residential price index edged 1.7% (2.0% y/y) higher. The government price index increased 2.4% (2.7% y/y), the same as in Q3.
The GDP data can be found in Haver’s USECON and USNA databases. USNA contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in AS1REPNA.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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