The US economy maintained a solid pace in the final quarter of 2024, driven by strong consumer spending and setting it apart from other global economies. Economists surveyed by Bloomberg project the government’s initial fourth-quarter gross domestic product (GDP) estimate will show an annualized growth rate of 2.7%. This follows back-to-back quarters of around 3% growth, underscoring the resilience of the US economy.
This latest economic data arrives just after the conclusion of the first Federal Reserve policy meeting of 2025, where officials are expected to keep interest rates unchanged, following their December meeting’s indication of only two rate cuts for the year. This decision reflects persistent demand and stubborn inflation, factors that have shaped the US economic landscape in recent months.
Consumer Spending Remains Strong
According to the anticipated GDP figures, personal consumption of goods and services is expected to have exceeded a 3% annualized pace for the second consecutive quarter, fueled by a robust labor market. This consumer spending momentum continues to explain the US’s superior performance compared to other advanced economies in Europe and beyond.
In stark contrast, European economies are showing signs of stagnation. Projections suggest that the French economy barely grew in the final months of 2024, while Germany likely saw a slight contraction. Broader euro area GDP data, set for release on Thursday, is expected to reveal minimal growth, continuing a long-standing trend of sluggish economic performance across the region.
US Economic Outlook for 2025
Ahead of Friday’s household spending report, which is likely to indicate continued economic momentum into 2025, economists predict a slight uptick in the Federal Reserve’s preferred inflation gauge. The personal income and spending data will offer additional insights into future trends.
Bloomberg Economics notes that although loan-delinquency rates have been rising, particularly among lower-income households, wealthier consumers—who account for roughly 40% of consumer spending—have benefited from the recent equity market rally and increased asset values. This trend has led to an updated forecast for consumption in 2025, which is expected to slow more gradually than initially anticipated.
Global Economic Developments
In other parts of the world, the Bank of Canada is anticipated to cut rates by 25 basis points on Wednesday, signaling a slowdown after two consecutive 50 basis-point cuts. This comes amid uncertainties surrounding US President Donald Trump’s tariff threats. In Canada, GDP data for November and a flash estimate for December will reflect the economic impact of the recent election and Prime Minister Justin Trudeau’s sales tax holiday.
Elsewhere, the eurozone and Sweden are expected to follow suit with rate cuts, while Brazil is set to raise rates by 100 basis points. Japan’s central bank decision to increase its rate to the highest level in 17 years will also keep investors focused. Japan will release a slew of economic data starting Tuesday, including December producer prices for services firms, followed by consumer confidence figures on Wednesday. Additionally, retail sales and housing starts are expected to show limited change.
Australia will release several economic indicators, including December consumer prices, which are expected to show an increase compared to the previous year. Trade data from New Zealand, along with consumer and business confidence reports, will also be closely monitored.
Asia-Pacific Focus
In Asia, much of the region, including China, Hong Kong, and South Korea, will be celebrating the Lunar New Year starting Wednesday, resulting in a quieter week for economic data. However, China’s January manufacturing data, set for release on Monday, and December industrial profits, which are expected to show a decline, will attract attention.
Thailand will cap the week with trade and manufacturing production figures on Friday, while the Philippines is expected to report faster GDP growth in the fourth quarter compared to the previous quarter.
Overall, while the US economy is poised for a strong finish to 2024, global growth remains uneven, with Europe and parts of Asia facing more significant challenges.
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