The BEA knocked its fourth-quarter estimate from 1.4 percent to 0.7 percent. Details below.
Real GDP, Real Final Sales, and Real GDI 2025 Q4
The BEA reports Real gross domestic product (GDP) increased at an annual rate of 0.7 percent in the fourth quarter of 2025 (October, November, and December), according to the second estimate released today by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 4.4 percent.
2025 Fourth-Quarter Details
Real GDP: 0.7 percent from 1.4 percent
Real Final Sales: 0.4 percent from 1.2 percent
Real Final Private Domestic Sales: 1.9 percent from 2.4 percent
Real Final Domestic Sales: 0.6 percent from 1.1 percent
Real GDI: N/A
GDI is delayed by one release in the first three quarters of the year. For the final quarter, GDI is not available until the third release.
Contributions to GDP
Percentage Point Contributions to GDP Detail
PCE Services: 1.25PP from 1.59 PP
PCE Goods: 0.07 from -0.01 PP
Government: -1.03 from -0.90 PP
Residential Investment: -0.02 from -0.06 PP
Nonresidential Investment: 0.28 from 0.51 PP
CIPI: 0.28 from 0.21 PP
Exports: -0.36 from -0.01 PP
Imports 0.15 from 0.18 PP
PCE stands for Personal Consumption Expenditures+.
CIPI stands for Change in Private Inventory.
The negative revision was not just one thing.
Key Revisions
PCE Services: -0.34 PP
Government: -0.13 PP
Nonresidential Investment: -0.23 PP
Exports: -0.35 PP
CIPI: +0.07 PP
PCE Goods: +0.08 PP
Other than government, this is a nasty set of revisions.
On March 3, 2026, I commented Expect a Negative Revision to 2025 Q4 GDP. Two Reasons
My first reason was already seen big negative revisions construction spending. My second reason was “But with the economy generally weakening, other revisions rate to be negative as well. That is reason number two.”
This was much bigger to the downside than I called for. It is serious weakening. The Bloomberg consensus was no change.
Real GDP vs GDI in Billions of Dollars
Real GDP and real GDI (gross domestic income) are two measures of the same thing.
Income realized = products sold.
For the first three quarter of the year, GDI is delayed by one release. For the fourth quarter, GDI is only available on the third (final) estimate for the quarter.
Starting in the third quarter of 2022, a big divergence between GDP and GDI developed.
Many economists believe GDI is the better measure. I am in that camp and believe GDP is overstated.
On February 26, 2026 I commented How Much Did AI Spending Contribute to Fourth-Quarter 2025 GDP?
I will revise those numbers shortly.
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