US economy grew slower than expected in fourth quarter

• Fourth quarter GDP growth of 1.4% fell well short of the 3% consensus forecast from economists surveyed by LSEG
• The 1.4% growth rate represents a slowdown from the third quarter's pace, signaling potential economic cooling
• The advance estimate covers the period from October through December 2024

Summary

Key Economic Data:

The U.S. economy expanded at just 1.4% annualized growth in the fourth quarter (October-December), significantly missing economist expectations of 3.0% growth, according to the Commerce Department's Bureau of Economic Analysis (BEA) advance estimate released Wednesday. This marks a notable deceleration from the third quarter's stronger growth rate.

Market Implications:

The substantial miss versus consensus forecasts—more than half the expected rate—signals potential economic headwinds entering 2024. The slower-than-anticipated GDP growth may influence Federal Reserve monetary policy decisions and could prompt concerns about economic momentum. This disappointing data contrasts sharply with the White House's messaging touting economic strength and referencing job report figures.

Policy Context:

The report comes amid ongoing political debate over economic performance, with the White House defending the current administration's tariff strategy and highlighting efforts to reduce prescription drug costs. The data release provides concrete economic metrics against which these policy initiatives will be measured.

Investor Considerations:

The significant gap between actual (1.4%) and expected (3.0%) GDP growth represents material information for market participants. Traders should watch for potential market volatility as investors reassess growth expectations, corporate earnings forecasts, and Fed rate path assumptions. The weaker growth figure may support arguments for dovish monetary policy but could also raise stagflation concerns depending on accompanying inflation data.

This developing story warrants continued monitoring as additional economic indicators are released and as analysts assess the broader implications for equity markets, fixed income, and currency valuations.