U.S. GDP Growth Slows But Corporate Profits and Income Surge

The U.S. economy expanded at an annualized rate of 2.4% in the final quarter of 2024, reflecting solid consumer and government spending, according to the latest data from the Bureau of Economic Analysis.

The third estimate of real GDP for Q4 2024, released by the U.S. Bureau of Economic Analysis (BEA), indicates that the economy grew at a 2.4% annual rate from October to December. While this represents a slight upward revision from the second estimate of 2.3%, it marks a slowdown from the 3.1% growth recorded in the previous quarter.

Key Drivers of Growth

The fourth-quarter expansion was largely fueled by strong consumer and government spending. These gains were partially offset by declines in investment and exports. Imports, which are subtracted in GDP calculations, decreased during the period—helping to slightly lift the overall growth figure.

According to the BEA, the revision in Q4 GDP mainly reflects lower imports than previously estimated. While investment declined, consumer spending increased and trade improved, softening the deceleration from Q3.

From an industry perspective:

Private goods-producing industries grew by 2.3%
Private services-producing industries expanded by 2.4%
Government activity rose 2.7%

Real gross output, a broader measure of total economic activity, grew by 1.7%, supported by gains in all major sectors, including a 3.1% rise in government output.

Inflation and Income Measures

The price index for gross domestic purchases increased by 2.2% in Q4, slightly below earlier projections.

The PCE price index rose 2.4%, while core PCE increased 2.6%, slightly below earlier estimates. Real gross domestic income (GDI) jumped 4.5% in Q4, up from 1.4% in Q3, showing strong income growth.

Corporate profits also rebounded sharply, rising by $204.7 billion, reversing a $15.0 billion decline in the previous quarter.

Full-Year 2024 Economic Performance

For the full year, real GDP grew by 2.8%, consistent with previous estimates. The growth was broad-based, supported by higher consumer spending, business investment, government expenditures, and exports.

Private goods-producing industries expanded 3.4%
Private services-producing industries rose 2.8%
Government output increased 1.9%

Inflation remained in check, with the gross domestic purchases price index climbing 2.4% and the PCE price index up 2.5%. Excluding food and energy, core PCE inflation rose 2.8%, all in line with earlier data.

Real GDI posted a 3.0% gain in 2024, accelerating from 1.7% in 2023. Corporate profits surged by $281.3 billion, a notable jump from the $229.8 billion increase seen in 2023.

Despite the Q4 slowdown, the strong performance in income and corporate profits suggests underlying economic strength. The latest data highlights a resilient economy entering 2025, though challenges remain amid shifting investment trends and global trade uncertainties.

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