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U.S. Economy’s Growth Slows in Q4, Raising Concerns

2024.01.25

 

Key Takeaways

  • Economists predict a Q4 GDP growth slowdown to 2%, marking the lowest pace since Q2 2022.
  • Mixed outlooks for 2024 with concerns over consumer spending and inflation’s impact on Fed policies.

Economic Deceleration

The U.S. economy appears to have ended 2023 on a softer note, with GDP growth slowing to an estimated 2% in the fourth quarter, according to Wall Street economists. This marks a significant deceleration from the 4.9% growth in Q3 and the weakest performance since a contraction in Q2 2022.

Future Outlook

With the anticipated Q4 slowdown, attention shifts to potential economic trends in 2024. Bank of America forecasts a further slowdown in consumer-driven growth due to tighter financial conditions and a cooling labor market, predicting a mere 1% growth in Q1 2024.

 

Moreover, Non-consumer sectors like business investment and housing are expected to weaken, contributing to the GDP deceleration. Bank of America also highlights a slowdown in inventory restocking as a drag on the overall economic performance.

Mixed Projections

While Goldman Sachs slightly raised its Q4 GDP estimate to 2.1%, it maintains a relatively optimistic outlook for 2024, projecting a 2.1% annual growth. However, there’s a consensus on the economy facing headwinds from monetary tightening and persistent inflation.

Consumer Spending and Inflation

Consumer spending, a critical driver of the U.S. economy, is under scrutiny for its sustainability in supporting growth. The upcoming GDP report and inflation data will be pivotal for the Federal Reserve’s policy decisions, with market participants closely monitoring the central bank’s response to evolving economic conditions.

Diverse Views

Economic forecasts for 2024 vary, with some analysts expecting a slowdown but not a recession. The impact of the Federal Reserve’s previous rate hikes and inflation’s persistence will likely shape the economic landscape, with Citigroup cautioning against overly optimistic assessments of the macroeconomy.

 


More content from CoinRank:

US Economy Aims for Recovery Amid Recession Fears in 2024

US Consumers Deplete Savings, Increasing Credit Card Debt Amid Inflation

US Inflation Eases in November, Aligning with Fed Expectations

 

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