Barring another glitch in the federal government’s on-again-off-again operating schedule, the delayed report for the fourth-quarter GDP report is set for release in two weeks (Feb. 20). When the update arrives, it’s on track to report a softer-but-still-resilient expansion for last year’s final quarter, based on the median for a set of nowcasts compiled by The Capital Spectator.

Today’s update indicates 2.7% annualized growth for Q4. That’s substantially below Q3’s torrid 4.4% pace. Despite the anticipated downshift, the Q4 nowcast, if correct, will reaffirm that US economic resilience prevailed through the end of 2025.
 

Economic data from other sources unaffected by the government shutdown already highlight a strong probability that the economic expansion continued through December into January. The Dallas Fed’s Weekly Economic Index (WEI), for instance, reflects a steady, moderate year-over-year trend in GDP in recent history.     

PMI survey data for December and January also suggest that a growth bias endures. “Sustained service sector growth, supported by a robust rise in manufacturing output in January, indicates the economy is growing at an annualized rate of around 1.7%,” says Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

The recession worries of several months back in some circles once again look misplaced. That doesn’t mean that the economy doesn’t face challenges. But US resilience isn’t easily displaced, which is surprising, given the turmoil over the past year on trade, monetary policy, and elsewhere.

“Textbooks would say uncertainty is bad for economic growth, but there’s not much evidence that it’s had a significant impact on the US economy so far,” said Neil Shearing, group chief economist at Capital Economics. “Business investment is the first place you would expect it to show up, but that’s been strong.”Exactly why the US growth has held up better than expected will take time to unravel. Meantime, it’s fair to say that 2025 looks set to go into the history books as a year that defied the experts in terms of growth’s persistence.

“If you walked 100 economists in a room one year ago and informed them of these developments today, I suspect virtuallyall would project the US economy would be stagnant at best and cratering at worst,” said Ben Harris, director of economic studies at the Brookings Institution, during a conference last week at the think tank.

He continued: “Why haven’t simultaneous shocks, previously thought to be catastrophic, derailed the economy? I see four possible explanations. The shocks are not as large as some may think, offsetting stimuli compensate for the negative impact, prior understanding the economy is misguided, it will take time to realize the full impact of recent policy decisions. Ultimately, my conclusion is more pessimistic than I would hope for. If these policy shocks persist, their impact will likely be more damaging than what we have observed so far.”

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