In the fourth quarter, the GDP rose by 3.4%, higher than expected forecasts of 3.2% but lower than the 4.9% increase seen in the third quarter, according to the Commerce Department. Adjusted profits after taxes reached a new record high of $2.8 trillion, with profits increasing by 3.9%, exceeding expectations of 3.3%.
An analysis by EY economist Lydia Boussour revealed that corporate profits saw a substantial increase in the fourth quarter, reaching a new record high. Before-tax corporate profits increased by $133 billion, the largest increase since the second quarter of 2022, and profit margins expanded for the second consecutive quarter to reach 12.2% of GDP due to faster productivity and stringent cost controls.
Inflation fell to 2% in the fourth quarter based on the “core” personal consumption expenditures (PCE) price index, excluding food and energy categories and preferred inflation gauge of the Federal Reserve. New monthly core PCE data is expected to be released on Friday, which recorded a 2.8% year-over-year increase in January.
Market commentators have praised the latest GDP readings, citing resilience of U.S economy with positive trend in consumer spending and nonresidential fixed investment as key factors contributing towards it as highlighted by Michelle Cluver head of ETF portfolios at Global X while Tobias Burns from The Hill provided more insights on this topic
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