The U.S. Bureau of Economic Analysis (BEA) just dropped its second estimate for the U.S. Gross Domestic Product (GDP) growth in the fourth quarter of 2024, and it’s looking like the economy is holding its own. Real GDP—think of it as the inflation-adjusted value of everything produced in the country—grew at an annualized rate of 2.3% from October to December 2024. That’s right in line with the initial estimate from late January and a bit of a slowdown from the 3.1% growth we saw in Q3. Let’s break it down

A Solid Finish to 2024

For the full year, the U.S. economy expanded by 2.8% in 2024, slightly down from 2.9% in 2023. That’s still a pretty robust performance, especially when you consider the wild ride of recent years—think pandemic lows, supply chain chaos, and inflation spikes. The fact that we’re still growing at this pace shows resilience, driven by some key players: consumer spending and government spending.

Consumer spending, which makes up about two-thirds of the economy, was a big driver, ticking up across both goods (like cars and recreational gear) and services (think healthcare and dining out). Government spending also chipped in, with both federal and state levels contributing to the growth. On the flip side, business investment took a dip, and exports softened, which put a bit of a damper on the overall picture.

 Inflation and Prices: Still in the Mix

Alongside growth, prices are always a hot topic. The GDP price index—a measure of inflation tied to what we produce—jumped to 4.2% in Q4, way above the 2.2% economists expected and up from Q3’s 2.2%. That’s a signal that price pressures might be heating up again. Meanwhile, the Personal Consumption Expenditures (PCE) price index, a favorite of the Federal Reserve, rose by 2.3%, and excluding food and energy (aka “core PCE”), it hit 2.5%. These numbers suggest inflation’s still above the Fed’s 2% target, so don’t expect interest rate cuts anytime soon.

What’s Behind the Numbers?

The Q4 growth story isn’t without its wrinkles. Hurricanes Milton and Helene stirred things up in October, disrupting business as usual in the South, while labor strikes added some extra turbulence. The BEA notes these events are baked into the data, though they can’t pin down the exact impact. Plus, a big drop in private inventories—think unsold goods—shaved nearly a full percentage point off the growth rate. That’s a volatile piece of the puzzle, so it’s not necessarily a red flag for the future.

Looking Ahead to 2025

So, what does this mean for 2025? The 2.3% growth rate is solid but not spectacular, and that inventory drop might just be a blip. Economists are already eyeing Q1 2025, with early “nowcasts” (like the Atlanta Fed’s GDPNow model) pegging growth around 2.3% again as of mid-February. That suggests we’re on a steady path, though risks—like potential tariffs or immigration policy shifts under the new administration—could shake things up.

For now, the U.S. economy’s like a reliable old pickup truck: not breaking speed records, but getting us where we need to go. Inflation’s still a wildcard, and the Fed’s likely to keep a close eye on it.