The U.S. economy concluded 2024 on a robust note, expanding at a 2.3% annualized rate in the fourth quarter. This growth, however, came with its challenges. Real equipment outlays slipped by 7.8% during the same period, primarily due to anticipated decreases in transportation equipment linked to strikes at Boeing. Despite these setbacks, solid consumer spending and a notable rise in real final sales to private domestic purchasers, up by 3.2%, bolstered the economic landscape.
The fourth quarter's economic performance was not without its complexities. The decline in real equipment outlays was attributed largely to disruptions in the aerospace sector, which significantly impacted transportation equipment spending. Additionally, spending on information processing equipment was weaker than anticipated, contributing to the overall dip in equipment investments.
This period also saw the potential for revisions in GDP growth estimates. The Q4 data suggested that imports might be revised upward, potentially leading to downward adjustments in the second and third GDP growth estimates. Despite these factors, the economy's expansion was held back by slower inventory stockpiling, which affected overall growth rates.
Consumer spending emerged as a key driver of growth, partially fueled by anticipatory demand ahead of potential tariffs. This consumer behavior helped counterbalance some of the negative impacts from other sectors, ensuring that the economy maintained its forward momentum into the new year.
In Europe, the European Central Bank (ECB) has responded to global economic conditions by cutting interest rates again by 25 basis points. This move is part of an ongoing rate cut cycle aimed at stimulating economic activity in the region. The ECB's actions may have ripple effects on international markets, influencing investment decisions and currency valuations.
Meanwhile, gold prices have remained near their all-time highs, with a significant resistance level at $2,800. The U.S. Dollar's renewed offered stance has shifted market focus to this price point, highlighting the precious metal's role as a hedge against economic uncertainty.
The advance goods trade balance presented another dimension of economic performance, showing a considerable widening of the deficit due to a surge in industrial supplies imports. Additionally, retail and wholesale inventory data indicated declines in December, reflecting adjustments in business strategies and supply chain management.