The US economy expanded at a 2.4% annualized rate in the fourth quarter of 2023, a stronger showing than earlier estimates indicated.
Corporate profits surged by 5.9%—the largest quarterly increase in more than two years—and profit margins rose to 15.9%, notably higher than pre-pandemic levels. Higher margins give firms more flexibility to absorb potential cost increases, such as tariffs, without immediately passing them on to consumers.
Revisions to the data trimmed consumer spending growth to 4%, but stronger export activity, increased government spending, and a pickup in business investment helped lift overall growth. Despite the robust finish to 2023, several major financial institutions are forecasting slower growth in 2025, citing uncertainty around trade policy and its potential economic effects.