30 January 2025
If you are covering the latest US GDP figures, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The US economy slowed slightly in Q4 2024, with the first reading of Q4 annualised US real GDP growth coming in at 2.3%, a little lower than expectations. While this is down compared to the 3.1% growth seen in the third quarter, this is only the first estimate, and we could well see revisions in the future. For the full year, real GDP increased 2.8%, which shows the US economy has remained remarkably robust during what has been a period of significant change.
“The US economy slowed slightly in Q4 2024, with the first reading of Q4 annualised US real GDP growth coming in at 2.3%, a little lower than expectations. While this is down compared to the 3.1% growth seen in the third quarter, this is only the first estimate, and we could well see revisions in the future. For the full year, real GDP increased 2.8%, which shows the US economy has remained remarkably robust during what has been a period of significant change.
“As it became more apparent that a Trump win was likely, there were some signs that spending was pulled forward in order to avoid future import tariffs. Car sales in particular were supported by this trend, and we may see some destocking in the early part of 2025 as a result. Meanwhile, retail sales also continued to grow at a robust pace, due in part to continued real wage growth and low unemployment.
“The International Monetary Fund raised its growth projection for US GDP earlier this month, increasing from 2.2% to 2.7% for the year ahead. However, with interest rates likely to see little in the way of cuts this year and policies looking generally inflationary, higher than expected corporate loans costs could stymie some expansion plans. Similarly, the recent freezing of Federal spending previously approved by Congress risks knocking confidence and damaging the outlook for certain sectors.
“While overall economic growth in 2025 still looks good, heavy capital expenditure plans linked to AI expansion could yet see challenge in light of DeepSeek’s recent breakthrough, potentially creating a chink in the armour of US exceptionalism.”
