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Thanks To a Late Holiday Spending Surge, the U.S. Economy Grew by 2.5% in 2024

The U.S. economy expanded by 2.5% in 2024, according to the Commerce Department’s latest figures, marking another year of solid growth. Despite some economic headwinds, resilient consumer spending and strategic investments pushed the economy forward. As President Donald Trump takes office, questions remain about how his economic policies will shape 2025.
This steady expansion underscores a strong labor market and rising wages that kept consumer demand high. However, slowing business investment and the looming impact of tariffs on trade partners introduce uncertainty into the economic outlook.
The 4th Quarter Surge That Sealed a Strong Year
Despite concerns about inflation and high interest rates, the economy gained momentum in the final quarter. Gross domestic product (GDP) grew at an annualized rate of 2.3% from October to December, slightly below forecasts but still reflecting economic resilience. Consumer spending played a critical role, accelerating to an annual rate of 4.2% in Q4, driven by purchases of durable goods like cars and appliances.
One key factor behind the late-year surge was anticipation of new tariffs. Shoppers rushed to make big-ticket purchases before potential price hikes in 2025, particularly on imported goods such as automobiles, electronics, and home appliances. Retailers reported increased demand as consumers sought to secure lower prices before potential trade restrictions took effect. Additionally, easing supply chain disruptions allowed businesses to stock up ahead of policy changes, reducing delivery delays and keeping shelves well-stocked. Many companies also accelerated inventory purchases to avoid potential cost increases, contributing to the strong fourth-quarter growth.
Investments That Paid Off in 2024
Technology stocks were among the biggest winners in 2024, as AI-driven companies, chipmakers, and cloud computing firms saw continued growth. Businesses invested heavily in digital transformation, which drove significant gains in the tech sector. The energy sector also performed well, with oil and natural gas investments surging due to geopolitical tensions and ongoing supply chain constraints that kept demand high. Consumer discretionary stocks saw strong gains, thanks to a confident American consumer fueling retail and auto sales.
Additionally, the financial sector saw positive momentum, benefiting from steady interest rates and increased consumer borrowing. Banking stocks performed well as mortgage applications rebounded and credit card spending remained strong. The healthcare sector also posted gains, fueled by biotech innovations and increased government funding for medical research. Meanwhile, industrial stocks—particularly in defense and aerospace—benefited from strong government contracts and geopolitical developments that boosted military spending.
However, business investment slowed in the final months of the year, particularly in manufacturing and real estate, as companies braced for higher costs and potential shifts in trade policy.
Will The U.S. Economy Grow in 2025?
With Trump back in the White House, his economic policies—including tariffs on imports and corporate tax revisions—could shape the next phase of growth. While his push for domestic manufacturing may boost certain industries, trade restrictions could increase costs for businesses and consumers.
Investors are watching the Federal Reserve closely. While interest rates remained high in 2024, the Fed signaled a more cautious approach to further hikes. Any shifts in monetary policy could impact market sentiment and economic expansion moving forward.
The coming months will reveal whether the economy can sustain its momentum or if policy changes will create new hurdles. Strong consumer spending and targeted investments have been key drivers, but rising costs and trade uncertainties loom large.
Will the U.S. economy continue growing under Trump’s second term? Tell us what you think!

1 Comment
Face it. The market is grossly over valued. The couple of percentage points it went down because of possible tariffs is nothing. The market has a long history of (Shaking off problems) it will take a lot more then tariffs to shake the market.