US economic growth slows in the 4th quarter.

WASHINGTON (Reuters) - U.S. economic growth slowed in the fourth quarter, the government confirmed Thursday, and the loss of momentum appears to have persisted into the start of this quarter amid cold temperatures and concerns that tariffs will hurt spending through higher prices.

Gross domestic product increased at an annualized rate of 2,3% in the last quarter, after accelerating at a pace of 3,1% in the July-September quarter, the Commerce Department's Office of Economic Analysis reported in its second estimate of fourth-quarter GDP on Thursday.

Economists polled by Reuters had expected that GDP growth would not be revised. The figure was revised upward by less than 0,1 percentage point, which, after rounding, corresponded to the 2,3% rate estimated last month.

Increases in government spending and exports were partially offset by downward revisions in consumer spending and investment. However, consumer spending, which accounts for more than two-thirds of the economy, grew at a rate of 4,2% in the last quarter, after rounding, matching the previously estimated pace.

The economy grew 2,8% in 2024, following an expansion of 2,9% in 2023.

It is expanding well above the 1,8% rate that Federal Reserve officials consider to be the non-inflationary growth rate.

However, there are signs that the expansion cooled even further at the start of the first quarter.

The snowstorms and unseasonably cold temperatures that blanketed many parts of the country in January weighed on retail sales and the housing market, as well as restricting job growth.

Tariffs on imports, already imposed or planned by President Donald Trump in his first month in office, have eroded consumer and business confidence. Fears are growing that the tariffs will increase product prices and limit the Federal Reserve's ability to continue lowering interest rates.

The Trump administration's efforts to cut spending and downsize government, which resulted in unprecedented layoffs of federal employees, are also seen as a risk to spending, the main driver of the economy. Federal suppliers have also been affected by the spending cuts.

As a measure of domestic demand, final sales to private domestic buyers – excluding inventories, trade and government – ​​increased at a rate of 3,0%. Private final sales had previously been estimated to have grown by 3,2%.

The PCE price index, excluding food and energy, rose at an upwardly revised pace of 2,7%, from the previously reported 2,5%. The core PCE is one of the inflation measures monitored by the US central bank for its 2% target.

The Fed stopped cutting interest rates in January, having reduced its benchmark rate by 100 basis points to the range of 4,25% to 4,50% since September.

(Reporting by Lucia Mutikani)