U.S. real GDP disappoints with 0.7 percent Q4 2025 gain, Gregory Daco notes

U.S. real GDP disappoints with 0.7 percent Q4 2025 gain, Gregory Daco notes
U.S. Q4 GDP at 0.7 percent

U.S. real GDP increased by 0.7 percent quarter-on-quarter in the fourth quarter of 2025, marking a weak end to an otherwise resilient year.

Gregory Daco reported that the government shutdown contributed a 1 percentage point drag to the result. Year-over-year, real GDP grew by 2.0 percent. Consumer spending rose by 2.0 percent, business investment gained 2.2 percent, and residential investment slipped 0.5 percent. Trade subtracted 0.2 percentage point, inventories added 0.3 percentage point, while government spending dropped 5.8 percent. Inflation came in at 2.8 percent year-over-year, with core inflation at 2.9 percent.

The latest data underline persistent headwinds from both the fiscal sector and trade, echoing broader pressures highlighted in Gregory Daco’s examination of the evolving U.S. trade deficit trend. Meanwhile, the interplay between solid consumer demand and stubborn inflation draws parallels with Daco’s prior analysis of ISM manufacturing expansion and inflationary dynamics, offering further context to the current economic landscape.

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