After two straight quarters of strong growth, US economic output is on track to downshift in the upcoming report on 2025’s fourth quarter, according to the median estimate for a set of GDP nowcasts compiled by CapitalSpectator.com. The expected growth downgrade is substantial, but is unlikely to trigger a recession warning, based on the current numbers.

Q4 GDP is projected to rise by a modest 1.3% (annualized changed), according to today’s median estimate. That’s sharply below the sizzling 4.3% increase reported for Q3. The Bureau of Economic Analysis was originally scheduled to publish Q4 data on Jan. 29, but the government shutdown has delayed the update to a yet-to-be announced date.
 

The most optimistic component of the median estimate is the Atlanta Fed’s GDPnow model, which is currently estimating a 2.7% rise in GDP (as of Jan. 5). But even assuming this estimate is accurate, it still equates with a significant slowdown in growth following the strong run during Q2 and Q3.

Looking beyond Q4 still presents an upbeat outlook, says Michael Pearce, chief US economist at Oxford Economics. “We expect fading policy uncertainty, the boost from tax cuts and the recent loosening of monetary policy to mean the economy strengthens in 2026,”

Perhaps, but the latest nowcasts suggests some degree of cooling in the final quarter of 2025 before a possible revival this year. “The flash PMI data for December suggest that the recent economic growth spurt is losing momentum,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, referring to his firm’s survey-based GDP proxy indicator. Speaking in mid-December, he advised: “With new sales growth waning especially sharply in the lead up to the holiday season, economic activity may soften further as we head into 2026.”

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