Donald Trump Economic system: Donald Trump inherits robust financial system as US progress fee hits 2.8% in 2024 amid ongoing inflation considerations

The US financial system wrapped up 2024 on a strong word, with shopper spending and authorities assist taking part in key roles in driving progress, based on new information from the Commerce Division.
Regardless of some challenges, the financial system grew by 2.3% within the fourth quarter, barely beneath the two.4% that economists had anticipated. For the complete yr, GDP grew by 2.8%, a powerful efficiency, though barely down from the two.9% progress in 2023.

Shopper spending stays sturdy

Shopper spending rose by 4.2% within the ultimate quarter of 2024, the quickest tempo since early 2023. This progress was up from 3.7% within the earlier quarter. The financial system additionally benefitted from authorities spending and continued funding, though enterprise funding slowed, notably in gear spending, which fell sharply after two robust quarters.
Matthew Martin, senior US economist at Oxford Economics, mentioned, “Shoppers have been the inspiration of the financial system, and so they’ve been the largest driver of resilient progress in 2024,” as quoted by the AFP information company. He believes this progress will proceed, supported by low layoffs, wholesome job progress, and rising wages.

Inflation pressures persist

The report additionally confirmed ongoing inflation. The Federal Reserve’s most popular inflation measure, the private consumption expenditures (PCE) index, rose by 2.3% within the fourth quarter, up from 1.5% within the third quarter. Core PCE, which excludes meals and power, elevated by 2.5%, barely up from 2.2% within the earlier quarter.
Regardless of these inflation pressures, the financial system remained robust. A key a part of GDP, which excludes unstable objects like exports and inventories, grew by 3.2% within the third quarter, down from 3.4% within the earlier quarter.

Donald Trump inherits a wholesome financial system

President Donald Trump, who took workplace in January 2025, inherited a powerful financial system, with progress persevering with regardless of excessive rates of interest. Unemployment was 4.1% in December, and job beneficial properties stayed regular. The Federal Reserve saved its rate of interest unchanged in December, after chopping it thrice since September. Fed Chair Jerome Powell was quoted as saying to the Related Press, “We don’t have to be in a rush to make extra cuts,” because of the financial system’s power.

World comparability

The US financial system is rising strongly, whereas Europe is struggling, having seen zero progress on the finish of final yr. The European Central Financial institution not too long ago lowered its benchmark fee as a consequence of weak efficiency. Within the US, robust shopper spending, low unemployment, and rising wages have helped preserve progress, regardless of ongoing inflation considerations.
Trump has promised to chop taxes and cut back enterprise laws, however his plans on tariffs and immigration would possibly sluggish progress and lift costs. KPMG’s chief economist, Diane Swonk, identified that the results of those insurance policies will take time. Whereas some analysts anticipate progress to sluggish in 2025, they nonetheless consider the US financial system will stay robust for now.