This story incorporates reporting from Business Insider, Forbes and Barron’s on MSN.com.
The U.S. economy experienced slower-than-expected growth in the final quarter of 2024. According to preliminary estimates from various economic analysts, this marks the weakest fourth-quarter performance since 2018. Economists note that various domestic and international factors contributed to this downturn, posing challenges for policymakers and stakeholders alike.
Persistent inflationary pressures throughout much of 2024 weighed heavily on consumer spending, traditionally a vital engine of U.S. economic growth. Household expenditures showed signs of restraint as individuals and families adjusted to higher prices in housing, food, and energy sectors. Additionally, interest rate hikes by the Federal Reserve, intended to combat inflation, have led to a cooling of investment activities by businesses cautious in their capital expenditures.
Globally, the economic environment presented additional hurdles. The E.U. and China, major trading partners for the U.S., faced economic headwinds that further dampened demand for American exports. Trade tensions persisted, particularly in the technology and manufacturing sectors, affecting supply chains and reducing cross-border trade activity. Such international challenges played a significant role in curbing the U.S.’s economic momentum in the final months of 2024.
While the labor market remained relatively robust — with unemployment figures staying low compared to historical standards — the overall hiring pace slowed, indicating caution among employers. Job market uncertainties combined with the sluggish economic climate led businesses to adopt more conservative hiring and investment strategies.
Looking forward, experts suggest that policymakers need to address these domestic and international challenges proactively. The Federal Reserve’s monetary policy decisions in the coming months will likely influence economic recovery paths. Similarly, international trade negotiations and geopolitical developments will need ongoing attention to stabilize and boost economic growth prospects.
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