GDP growth was solid, albeit slower, as 2024 wrapped up. Here are the five things we learned from U.S. economic data released during the week ending January 31.
Economic growth slowed in Q4. Real Gross Domestic Product (GDP) grew 2.3 percent on a seasonally adjusted annualized pace during the final three months of 2024. This was down from its 3.1 percent annualized growth rate of Q3, leaving the Bureau of Economic Analysis measure up 2.8 percent for the year. GDP had grown 2.9 percent in 2023. Consumer spending was, by far, the biggest contributor to Q4 economic growth, adding 282 basis points to GDP. Also positively adding to GDP were government expenditures (+42 basis points, almost even split between federal and state/local spending), residential fixed investment (+21 basis points), and net exports (+4 basis points). Slower private inventory accumulation and nonresidential fixed investment were drags. The BEA will revise its Q4 GDP estimates twice over the next two months.
Consumers continued to spend money in December even as inflation accelerated. Real Personal Consumption Expenditures (PCE) increased a seasonally adjusted 0.4 percent, just below the Bureau of Economic Analysis measure’s November 0.5 percent reading. Spending on goods rose 0.7 percent, with solid increases for durable (+1.1 percent) and nondurable (+0.5 percent) goods. Nominal (not inflation-adjusted) PCE jumped 0.6 percent, funded by a 0.4 percent advance in nominal disposable income. After inflation adjustments, real disposable income inched up 0.1 percent. The savings rate fell by 3/10ths of a percentage point to +3.8 percent. Compared to a year earlier, real PCE grew 3.1 percent as real disposable income increased 2.4 percent. The same report includes the Federal Reserve’s preferred inflation measure: the PCE price index. The headline price index increased 0.3 percent in December and was up 2.6 percent over the past year. After removing food and energy, the core PCE price index gained 0.2 percent for the month and 2.8 percent from a year earlier. Both year-to-year comparables were above the Fed’s two-percent interest rate target.
The Fed kept short-term interest steady. The statement released this past week’s Federal Open Market Committee (FOMC) meeting notes that the U.S. economy “has continued to expand at a solid pace,” with a “solid” labor market and “somewhat elevated” inflation. Nonetheless, the Fed views the economic outlook as “uncertain.” The statement kept its commitment to “maximum employment and inflation at the rate of two percent.” As a result, the committee voted unanimously to keep the fed funds rate at a range of 4.25 percent and 4.50 percent while also continuing to reduce the central bank’s holdings of Treasury and mortgage-backed securities. Its next meeting will be in mid-March.
Durable goods orders slowed in December. New orders for manufactured durable goods fell 2.2 percent to a seasonally adjusted $282.4 billion. For 2024, the Census Bureau measure totaled $3.382 trillion, down 1.5 percent from the prior year. Transportation goods orders fell 7.4 percent (civilian aircraft: -45.7 percent, motor vehicles: -0.2 percent). Net of transportation goods, core durable goods orders grew 0.3 percent. Orders increased for fabricated metal products (+1.2 percent), electrical equipment/appliances (+0.3 percent), machinery (+0.2 percent), and computers/electronics (+0.1 percent). Durable goods shipments rose 0.9 percent in December to $287.4 billion and totaled $3.433 trillion for all of 2024 (+1.8 percent versus 2023).
Consumer sentiment declined in January. The Conference Board’s Consumer Confidence Index shed 5.4 points to a seasonally adjusted 104.1 (1985=100). This follows a 3.3-point decline in December. The present conditions index slumped 9.7 points to 134.3, while the expectations measure slipped 2.6 points to 83.9. The press release notes that consumers under 55 grew more pessimistic, whereas older Americans reported a “small uptick in confidence.” 18.4 percent of survey respondents view current economic conditions as “good,” compared to 15.4 percent who see them as “bad.”
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending January 25, 2025, First-Time Claims, seasonally adjusted): 207,000, -16,000 vs. the previous week, -18,000 vs. the same week a year earlier). 4-week moving average: 212,500 (+1.4% vs. the same week a year earlier).
- New Home Sales (December 2024, Sales of Single-Family Homes, seasonally adjusted annualized rate): 698,000. (+3.6% vs. November 2024; +6.7% vs. December 2023).
- Pending Home Sales (December 2024, Index (2001=100), seasonally adjusted): 74.2 (-5.5% vs. November 2024; -5.0% vs. December 2023).
- S&P Case-Shiller Home Price Index (November 2024, National Index, seasonally adjusted): +0.4% vs. October 2024; +3.8% vs. November 2023.
- FHFA House Price Index (November 2024, Purchase-Only Index, seasonally adjusted): +0.3% vs. October 2024; +4.2% vs. November 2023.
- Chicago Fed National Activity Index (December 2024, Index (>0.00 = U.S. Economy Growing Fast Than Its Historical Rate, seasonally adjusted): +0.15 (November 2024: -0.01; December 2023: -0.11).
- Agricultural Prices (December 2024, Prices Received by Farmers, not seasonally adjusted): +5.3% vs. November 2024; +11.8% vs. December 2023.
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What We Learned About the U.S. Economy Last Week 