GDP Slows Dramatically In 2025 Q4 To 1.4 Percent, Big Disappointment

Real GDP 2025 Q4 first estimate

The BEA’s GDP Report for 2025 Q4 dramatically missed estimates of 3.0 percent by GDPNow and 2.8 percent by Bloomberg Econoday.

Real GDP 2025 Q4 1st Estimate (Advance)

• Real GDP: 1.4 percent

• Real Final Sales: 1.2 percent

• Real Final Domestic Sales: 1.3 percent

• Real Final Private Domestic Sales: 2.4 percent

• Real GDI: Not available in first estimate

Percentage Point Contributions

Percentage Point Contributions to GDP Detail

• PCE Services: 1.59 PP

• PCE Goods: -0.01 PP

• Government: -0.90 PP

• Residential Investment: -0.06 PP

• Nonresidential Investment: 0.51 PP

• CIPI: 0.21 PP

• Exports: -0.01 PP

• Imports 0.18 PP

PCE stands for Personal Consumption Expenditures.

CIPI stands for Change in Private Inventory.

Imports neither add nor subtract from GDP by definition (D meaning domestic). However, the BEA assumes all sales are domestic so it adjusts by the dollar amount of imports.

I wish the BEA would point this out, but Imports do not subtract from GDP. They have no impact at all.

Enormous Topline Miss

This is the Biggest Miss by GDPNow in years. However, GDPNow was very close on Real Final Private Domestic Sales with its 2.6 percent estimate.

The difference between the Real GDP estimate and Real Final Sales is Change in Private Inventories (CIPI) that nets to zero over time.

Real Final Sales was only 1.2 percent.

Trump took aim at Powell and and the Shutdown. I will discuss in a second post. The economy is cooling rapidly led by labor markets.

Tariffs did nothing to reduce imports but they were a tax on consumers.

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