While it’s useless most of the time, and especially so when the US has just entered war throwing a wrench into the entire economic calculus, moments ago the BEA reported that Q4 GDP in the US was slashed by half after the 1st revision of data: instead of 1.4%, the US grew just 0.7% in the last quarter of 2025 (0.660% to be precise), and far below estimates of a 1.4% print. It was also the lowest GDP print since Q1 2025.
According to the BEA, GDP was revised down 0.7% point from the advance estimate, or exactly half, reflecting downward revisions to exports, consumer spending, government spending, and investment. Specifically, the revisions were as follows
- Personal consumption was slashed from 1.58% to 1.33% of the bottom line 0.7% print after the revision.
- Fixed Investment was also revised lower from 0.4% to just 0.29%.
- The Change in private inventories was the only upward revision, from 0.21% to 0.28%
- Net trade (exports less imports) was also revised lower, from 0.08% to -0.21%.
- Government’s contribution to GDP – which in Q4 was deeply negative due to the longest govt shutdown on record – was also lower than initially expected, subtracting -1.03% from the bottom line print, as opposed to -0.90%.
Final sales to private domestic purchases, which excludes government, trade and inventories, grew at a 1.9% pace. This measure of domestic demand, closely watched by policymakers, was initially estimated to have increased at a 2.4% rate. Domestic demand grew at a 2.9% pace in the July-September quarter.
While a pick up in growth is expected this quarter, the U.S.-Israeli war with Iran, which has driven up oil prices, is clouding the economic outlook, with many expecting a GDP hit should the oil price surge persist.
