US Q1 GDP growth slips but details stronger

(Sharecast News) - Economic activity in the US slowed at the end of 2024, but the underlying trends were much stronger. According to the Department of Commerce, gross domestic product expanded at a quarterly annualised pace of 2.3% over the three months ending in December.

That was short of economists' forecasts for a rate of expansion of 2.6%.

However, Paul Ashworth at Capital Economics noted how the rate of increase in so-called final sales to private domestic purchasers only ebbed by two tenths of a percentage point to 3.2%.

"The latter is a better gauge of underlying strength and suggests the economy remains strong, particularly given the fourth-quarter disruptions like the Boeing strike and hurricanes," he explained.

Ashworth went on to note that the slower pace of inventory accumulation subtracted nine tenths of a percentage point from quarterly and annualised GDP growth.

And the slowdown in Aerospace from Boeing should unwind going forwards.

Net external trade meanwhile was "fairly neutral" as both exports and imports fell by 0.8% in annualised terms.

Household consumption picked up from 3.7% to 4.1%.

Government outlays were up by 2.5%, but Ashworth anticipated that the hiring freeze and the general squeeze on the public sector would translate into a reversal in spending in the first three months of 2025.

"As a starting point, we expect first-quarter GDP growth to slow marginally below 2%."