US Economy Grows Steadily as GDP Slows and Trump Promises to Tackle Prices

US Economy Grows Steadily as GDP Slows and Trump Promises to Tackle Prices

The US economy has demonstrated resilience amidst fluctuating conditions, growing at a steady pace in 2024. Although economic growth decelerated in the last quarter, it capped another robust year, showcasing the nation’s economic strength and adaptability. With Donald Trump back in office, new economic pledges focused on reducing costs and revitalising domestic manufacturing are capturing attention.

Gross domestic product (GDP), a fundamental indicator of economic health, grew by 2.3% in the final quarter of 2024, according to official figures released on Thursday. This marked a deceleration from the 3.1% growth seen in the previous quarter, and it fell slightly short of economists’ expectations of 2.6%. However, annual GDP growth for 2024 stood at 2.8%, down just marginally from the 2.9% recorded in 2023.

A Promising Year Despite Slower Growth

Although the fourth quarter saw a slowdown, US economic performance in 2024 remained a testament to its robustness. Economists attribute the strong annual performance to steady consumer spending, effective inflation control measures, and stable employment rates. Consumer spending surged by 4.2% in the final quarter alone, offsetting weaknesses in inventories and investments.

Samuel Tombs, Chief US Economist at Pantheon Macroeconomics, noted, “Economic growth became increasingly reliant on households last year, with consumer spending driving essentially all of the overall increase in GDP.”

During his campaign for the presidency, Donald Trump pledged to address inflation and revive the economy, making these promises a central theme of his victory. Now, as president, he aims to deliver on these goals, particularly through initiatives that rapidly cut prices and incentivise domestic manufacturing.

Inflation Control and Stable Unemployment

Despite the varying pace of economic growth, inflation has shown considerable improvement in recent years. Following significant surges during the post-Covid recovery era, inflation moderated in 2024, aided by robust policymaking and Federal Reserve action.

The Federal Reserve held interest rates steady during its latest policy meeting, citing a continued solid economic expansion, stable unemployment, and mildly elevated inflation. Jerome Powell, the chairman of the Federal Reserve, emphasised the institution’s commitment to monitoring the economy carefully as Trump’s administration rolls out new economic policies.

The Trump Administration’s Economic Vision

President Trump’s administration has set forth ambitious plans to drive economic growth while addressing cost-of-living challenges. Among his key proposals is the introduction of tariffs on foreign imports, aimed at boosting domestic manufacturing. However, this approach has drawn mixed reactions from economists and business leaders, raising questions about its potential impact on inflation.

Underpinning these plans is Trump’s objective to bring prosperity to millions of Americans by fostering economic self-sufficiency and tackling rising prices. “This is a historic revival,” Trump remarked, stressing his vision of creating a thriving economy that works for all Americans.

Consumer Spending Takes the Lead

The fourth-quarter GDP figures revealed the pivotal role of consumer spending in driving economic activity. Many households appeared to make advanced purchases in anticipation of the tariffs proposed by the Trump administration. This surge in spending underscores the significant influence of consumer behaviour on the broader economy.

The government’s focus on ensuring stable economic conditions has further supported consumer confidence. While there are concerns about inventory management and investment weaknesses, the overall outlook remains positive, given the consistent contributions from household spending.

2025 Growth Amid Strategic Policies

Looking forward, the economic outlook for 2025 hinges on a combination of Trump’s economic policies and broader market conditions. His administration’s emphasis on manufacturing and cost reduction could yield significant advancements, even as questions remain about potential inflationary pressures from tariffs.

The Federal Reserve, meanwhile, remains in a watchful stance, prioritising data-driven decision-making to support economic stability. Powell’s assurance of a steady approach to policymaking highlights the Reserve’s commitment to fostering long-term growth.

The resilience of the US economy, demonstrated through strong consumer spending and employment stability, forms a solid foundation for future progress. With Trump’s plans poised to shape the economic landscape further, businesses, households, and policymakers alike will be closely observing the evolving dynamics.

Source

The Guardian


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