US economy grows at slower-than-expected pace in fourth quarter

The US economy grew at a slower-than-expected pace in the fourth quarter.

The Bureau of Economic Analysis’s advance estimate of fourth quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 2.3% during the period, below the 2.6% growth expected by economists surveyed by Bloomberg. The reading came in lower than the 3.1% growth seen in the third quarter.

Increases in consumer spending and government spending drove economic growth in the quarter while decreases in investment offset some gains. For the year, the US economy grew at 2.8% pace, slightly below the 2.9% number seen in 2023 but above the 2.5% growth seen in 2022.

Meanwhile, the “core” Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 2.5% in the fourth quarter, in line with estimates and above the 2.2% seen in the prior quarter.

The data’s release comes as investors try to gauge if the Federal Reserve will start cutting interest rates again in 2025 after holding them steady on Wednesday. Powell said in a press conference that the economy “remains strong” while inflation “remains somewhat elevated.”

“We don’t need to be in a hurry to adjust our policy stance,” Fed Chair Powell said.

Following Wednesday’s Fed meeting, markets see less than a 50% chance that the Fed cuts rates before its June meeting, per the CME FedWatch Tool.

This is breaking news. More to come…

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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The US economy grew at a slower-than-expected pace in the fourth quarter of 2021, according to recent data released by the Bureau of Economic Analysis. While many analysts had anticipated a more robust expansion, the economy only grew at a 2.3% annualized rate in the final three months of the year.

This slower growth was primarily attributed to a combination of factors, including supply chain disruptions, labor shortages, and rising inflation. The ongoing challenges posed by the COVID-19 pandemic also continued to weigh on economic activity, particularly in sectors such as travel, hospitality, and entertainment.

Despite the weaker-than-expected growth in the fourth quarter, many economists remain cautiously optimistic about the outlook for the US economy in 2022. The rollout of COVID-19 vaccines, along with significant fiscal stimulus measures, are expected to support a more robust recovery in the coming months.

However, uncertainties remain, particularly with regards to the trajectory of inflation and the potential for further disruptions to global supply chains. As policymakers and businesses navigate these challenges, the path to sustained economic growth in the US remains uncertain.

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