U.S. Economy Faces Slower Growth Despite Strong Domestic Demand

Economic growth in the U.S. decelerated to a 2.3% annualized rate in the fourth quarter. Consumer spending remained strong, but a record-high trade deficit and anticipated tariffs are influencing future economic projections. The Federal Reserve is maintaining a cautious approach to interest rate cuts this year.

The United States economy witnessed a slowdown in growth during the fourth quarter, with GDP increasing at an annualized rate of 2.3%. This deceleration follows a brisk 3.1% pace recorded in the preceding quarter, as reported by the Commerce Department's Bureau of Economic Analysis.

Despite strong domestic demand expected to influence Federal Reserve policies on interest rates, economic skepticism looms due to a record-high goods trade deficit in December. The Atlanta Fed has accordingly adjusted its GDP forecast down from an earlier 3.2% estimate to 2.3%.

Compounding concerns are policy shifts under the Trump administration, including proposed tax cuts and tariffs, which economists fear may drive inflation. The economy's expansion surpasses the non-inflationary growth rate benchmark, but considerations about fiscal, trade, and immigration policies leave future growth uncertain.

(With inputs from agencies.)