US Q4 2024 GDP Slows Sharply to 1.4% vs 3% Forecast
The U.S. economy expanded at an annualized 1.4% in Q4 2024, far below the 3.0% consensus forecast and down from 2.9% in Q3. The Commerce Department’s advance estimate marks the largest quarterly miss since early 2023. Key drivers: consumer spending grew modestly, business fixed investment weakened (equipment and structures up just 0.8%), government spending contributed less, and net exports subtracted from growth as imports outpaced exports. Inventories trimmed headline growth by 0.3 percentage points; residential investment rose 2.1%. Core PCE inflation was 2.8% year‑over‑year. Markets reacted quickly: Treasury yields fell, the dollar weakened, equities showed mixed sector moves, and market-implied odds of a March 2025 Fed rate cut rose sharply. The report signals a broad-based moderation rather than a contraction; policymakers will weigh slowing growth against persistent inflation. Traders should monitor upcoming employment and inflation prints for Fed guidance and potential volatility in rates, FX, equities, and crypto markets.
Neutral
A weaker-than-expected GDP print is typically mixed for crypto. On one hand, slower growth and falling Treasury yields lower opportunity cost for risk assets and can increase odds of Fed rate cuts—conditions that historically support risk-on moves in crypto. Market-implied probabilities for earlier cuts rose after the release, which can be bullish for longer-term risk appetite. On the other hand, the report signals demand moderation and heightened macro uncertainty; equities and cyclical assets may face pressure in the short term, and risk-off episodes can trigger sharp crypto drawdowns. Short-term impact: elevated volatility and potential selling in risk assets as traders reposition; crypto may briefly weaken with risk-off flows but could recover if rate-cut expectations firm. Long-term impact: if slowing growth pushes the Fed toward cuts without a rebound in inflation, lower rates could be constructive for crypto valuations. Overall, the immediate effect is neutral because opposing forces (eased monetary policy outlook vs. weaker economic demand and risk aversion) roughly balance.