The economic landscape in the United States has showcased a complex narrative as 2024 unfoldsWhile inflation has demonstrated some signs of easing, it remains susceptible to significant fluctuations and external disturbancesMoving into the fourth quarter of 2024, both the Personal Consumption Expenditures (PCE) and core PCE price indices are seeing a rebound in year-over-year ratesAnalysts project that inflation in 2025 will continue to face substantial challenges, compounded by potential shifts in the Federal Reserve's stance and instability within various asset classes.

Despite these inflationary pressures, the underlying economic structure appears resilientForecasts indicate an annual growth rate of 2.8% in real GDP for the United States for 2024, which reflects a slight deceleration of 0.1 percentage points compared to 2023. Notably, the quarterly rate of GDP growth for Q4 landed at 2.3%, down from 3.1% in the previous quarterThis demonstrates that while the economy is slowing down, it is still exhibiting strong signs of resilience above the average growth rate from 2011 to 2019, which sat at around 2.4% per year.

A closer examination of economic components reveals that consumer spending continues to be a significant driver for growthIn Q4, both goods and services consumption showed marked improvement, contributing strongly to economic activityPrivate investment also played a crucial role, particularly residential investment, which has emerged as a primary driver for the recovery in fixed asset investmentsHowever, the overall investment landscape softened during Q4 due to declines in equipment investment and inventory levels, indicating areas of weakness despite the positive trends.

To break it down, the overall GDP growth in Q4 saw a regression, with the annualized quarter-on-quarter rate settling at 2.3%, falling short of market expectations clocking in at 2.6%. The annual growth for Q4 was registered at 2.5%, a small reduction from Q3. Yet, when considering the year as a whole, the U.S. economy showcased impressive strength, maintaining a growth trajectory that indicates a robust consumer backdrop.

Consumption, in particular, proves to be a formidable force for the economy, with private consumption contributing significantly more to GDP growth in 2024 than in the previous year

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The year-over-year increase in private consumption rose to 1.9 percentage points, up from 1.7% in 2023, marking it as a central pillar supporting economic expansionIn Q4 alone, private consumption grew at an annualized rate that exceeded expectations, reaching 4.2%, representing a notable rebound from the previous quarter and yielding a substantial GDP uplift.

In terms of specifics, categories relating to goods and services consumption demonstrated notable strengthThe consumption of durable goods, propelled by increased spending on entertainment, vehicles, and automotive parts, witnessed an annualized quarterly growth rate leap to 6.6%, compared to 5.6% priorThe non-durable goods sector saw varied results, as consumption outside clothing observed declinesService consumption also ticked up, with healthcare and financial services experiencing minor slowdowns, while transport services saw the most substantial improvement, bouncing back significantly from a previous downturn.

Moreover, private investment displayed an upward trend in its economic contributions, with a rise to 0.7 percentage points for GDP from a flat contribution in 2023. The second quarter of 2024, in particular, illustrated a pronounced impact stemming from private capital expendituresBreaking it down further, residential investment notably increased its contribution to GDP growth by 0.5 percentage points, affirming its role as a catalyst for fixed asset recovery.

Nevertheless, looking specifically to Q4, private investment experienced a downturn with a quarter-over-quarter annualized rate plummeting from 0.8% in Q3 to -5.6%. This contraction accounted for a significant drag on GDP growth, primarily tied to substantial dips in equipment investment and inventory adjustmentsNotably, equipment investments fell dramatically, affecting GDP growth by nearly a full percentage pointOn the other end of the spectrum, residential investment saw a bounce back in Q4 with an annualized growth rate of 5.3%, underscoring its importance in counteracting the overall investment trends.

Turning to trade dynamics, the performance of imports in 2024 displayed resilience, resulting in a net export drag on the economy

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