US economy today, the US economy is on track to achieve more than 2% GDP growth in the fourth quarter, signaling robust economic performance as the year draws to a close.
According to the median estimate from various nowcasts compiled by CapitalSpectator.com, output is forecasted to grow by 2.4%. While this represents a decline from the strong 3.1% growth recorded in the third quarter, it is an improvement from last week’s estimate of 2.1% for Q4.
Despite the recent downshift in growth expectations, this slower pace still reflects a healthy economic environment. Analysts believe the moderation may be part of a normalization process as the US economy adjusts to reduced volatility in GDP changes following the pandemic.
As the year comes to a close, the US economy is set to finish 2024 with a solid growth rate for Q4. However, the upcoming year introduces new uncertainties, particularly with the incoming Trump administration's plans to modify policies across various sectors.
Mark Zandi, chief economist at Moody’s Analytics, observes, “Success for the Trump administration would be to do no harm to the exceptionally performing economy it is inheriting.” He warns that proposed measures such as new tariffs, deportations, and deficit-funded tax cuts could be harmful, depending on how they are implemented.
Additionally, there are growing worries that persistent inflation may impact the Federal Reserve’s plans for interest rate cuts. A new indication of inflation trends is expected soon with the release of the December consumer inflation report.
Economists predict mixed results, according to forecasts from Econoday.com. The headline Consumer Price Index (CPI) is anticipated to rise for the third consecutive month, increasing to 2.9% year-over-year. Conversely, core CPI is projected to remain steady at 3.3%, suggesting that the Fed’s target inflation rate of 2% continues to be elusive.
Market expectations indicate a high likelihood that the Federal Reserve will maintain its current target rate of 4.25%-4.50% during the upcoming January 29 policy meeting. For the March 19 meeting, the probability of no change is approximately 80%, based on the latest data.
Steven Wieting, chief economist and investment strategist at Citi Wealth, advises caution: “Investors should not count on further significant slowing in inflation.”
As the economic landscape evolves, these insights will be vital for navigating future market conditions.
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