US economic growth slows despite consumers spending

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Economic growth in the US slowed at the end of last year, as trade and investment declined and the country was hit by hurricanes and labour strikes.

The economy expanded at an annual rate of 2.3% between October and December, down from 3.1% in the three months before, according to the US Commerce Department.

The pace, fuelled by solid growth in consumer spending, was nevertheless weaker than economists had forecast.

The figures come amid heightened uncertainty about the path for the world's largest economy, as US President Donald Trump calls for a policy shake-up.

His plans include big cuts to government spending and implementing trade tariffs, which could be announced this week.

The US economy had been forecast to expand at roughly 2.5% in the final three months of 2024 though analysts said details of the Commerce Department report suggested growth remained solid.

"The US consumer has been unstoppable, supported by wealth creation, a strong labor market, and lending," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, adding that overall growth last year was "surprisingly strong".

Consumer spending - the biggest driver of the US economy - rose 4.2%. This helped offset a drop in the import and export of goods as well as a fall in private investment.

Analyst Samuel Tombs of Pantheon Macroeconomics noted that consumer spending was lifted primarily by a jump in purchases of goods, including cars.

He said that could indicate a temporary burst of buying from people worried about the impact of potential tariffs on prices.

"We would caution against concluding that underlying domestic demand remains unassailably strong," he added.