Domestic Demand Steadies U.S. Economy Amid Growth Slowdown

U.S. economic growth decelerated in Q4, but strong domestic demand may prevent rapid Fed interest rate cuts. GDP growth recorded at 2.3%, diverging from forecasts. The central bank remains cautious amid policy shifts, tax cuts, and trade concerns. Consumer spending remained robust, ensuring economic stability.

In the wake of a slowdown in U.S. economic growth during the fourth quarter, robust domestic demand is expected to keep the Federal Reserve on a cautious path regarding interest rate reductions this year.

The Commerce Department's Bureau of Economic Analysis reported that the gross domestic product (GDP) increased at a 2.3% annualized rate in the fourth quarter, following a 3.1% pace in the preceding period. Although this was in line with some economists' projections, it marked a slowdown from earlier expectations.

While the U.S. economy continues to defy recession predictions and grow above the 1.8% non-inflationary rate policymakers target, looming fiscal, trade, and immigration policies from the Trump administration contribute to a cloudy economic outlook. Consumer spending remains a key driver, growing at a significant 4.2% rate amid uncertainty.

(With inputs from agencies.)