Nowcasting the hot US economy Trump is inheriting

The US economy ended 2024 with its strongest performance in almost three years, according to CEIC's latest nowcast.

Our machine learning-driven model projects that real gross domestic product expanded at a 4% year-on-year pace in the fourth quarter. That's the strongest performance since the first three months of 2022, when the economy was snapping back from the pandemic; it's also a substantial acceleration from the 2.7% pace seen in 3Q.

This resilience gives a sense of why the US rate-cutting journey has been on hold while other central banks move to ease. (The Federal Reserve has a 98% chance of keeping its key target range between 4.25% and 4.5% when it meets on Jan. 29, the CME's FedWatch Tool showed on Jan. 21.)

Consumer spending has been driving the economy, helped by a strong job market. In Q3, consumption contributed 2.5 percentage points to the total quarterly annualized growth rate of 3.1%, as our final chart shows.

The Fed updated its economic projections in December and now expects to cut rates only twice in 2025 instead of four times, as previously projected.

The Bureau of Economic Analysis will release the GDP figure on Jan. 30.

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