The U.S. economy grew at a slower pace than expected in the third quarter of 2024, according to preliminary data released by the Bureau of Economic Analysis. The country’s real gross domestic product (GDP), an inflation-adjusted measure of all goods and services produced, increased at a 2.8% annual rate. This figure falls short of the second quarter’s 3% expansion and median economic forecasts of 3.1% third-quarter growth, according to Dow Jones data.
Despite the slower growth, the U.S. economy, valued at $29.4 trillion, remains the largest in the world. The expansion has continued despite elevated interest rates and concerns that the fiscal and monetary stimulus that carried the economy through the COVID crisis wouldn’t be enough to sustain growth.
Consumer spending, which accounts for about two-thirds of all activity, has helped keep the economy moving, as has a relentless wave of government spending that pushed the budget deficit to more than $1.8 trillion in fiscal 2024. Personal consumption expenditures increased 3.7% for the quarter, the strongest performance since Q1 of 2023, contributing nearly 2.5 percentage points to the total GDP growth rate.
However, an 11.2% jump in imports, which subtracts from GDP, held back the growth number and offset an 8.9% gain in exports.
The GDP release comes with the Federal Reserve poised to lower interest rates further despite the seemingly strong economy and inflation that remains above target, though far from its peak in mid-2022. Markets widely expect the Fed to cut another quarter percentage point off its benchmark short-term borrowing rate when policymakers conclude their two-day meeting on November 7.
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