US GDP up 2.3% in the fourth quarter second estimate, up 2.8% in 2024

The U.S. real gross domestic product (GDP) rose 2.3% in the fourth quarter of 2024, below 3.1% in the third quarter of 2024, according to the second estimate reported Thursday (Feb. 27) by the U.S. Bureau of Economic Analysis (BEA).

The second estimate was up 0.1% compared to the first estimate, which reflected gains in revised government spending and a reduction in estimated consumer spending and investment, according to the BEA report. Overall, consumer spending was up in the fourth quarter.

“The increase in real GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment,” the BEA noted in the report.

Real GDP for all of 2024 was up 2.8%, just below 2.9% in 2023. The BEA report noted GDP gains were primarily driven by consumer spending, investment, government spending, and exports. Imports increased.

Thursday’s BEA report also better outlined inflation in the fourth quarter. The price index for gross domestic purchases increased 2.3% in the fourth quarter. The personal consumption expenditures (PCE) price index increased 2.4%. Excluding food and energy prices, the PCE price index increased 2.7%.

For all of 2024, the price index for gross domestic purchases increased 2.4%, and the PCE price index increased 2.5%. Excluding food and energy prices, the PCE price index increased 2.8% in 2024.

St. Louis Fed President Alberto Musalem said in a Feb. 20 speech that the U.S. economy was in good shape as it entered 2025, with personal consumption of 4.2% in the fourth quarter the highest of any 2024 quarter.

“The prospects for continued solid growth look good,” Musalem noted in his prepared remarks. “The balance sheets of firms and households are generally in good shape. Financial conditions are supportive of economic activity, especially for borrowers who directly access capital markets for funding. Surveys indicate that business confidence has risen in the last three months and that planned capital expenditures have increased.”

He also said there are factors that could create headwinds for the economy in 2025.

“An alternative and plausible scenario in which inflation ceases to converge, or rises, at the same time the labor market weakens must also be considered,” he said. “This scenario could arise for a variety of reasons. These days, higher tariffs and immigration policies are often discussed and thought likely to increase prices, cool aggregate demand, and possibly soften employment.”