The BEA knocked its fourth-quarter estimate from 1.4 percent to 0.7 percent. Details below.
The BEA reports Real gross domestic product (GDP) increased at an annual rate of 0.7 percent in the fourth quarter of 2025 (October, November, and December), according to the second estimate released today by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 4.4 percent.
2025 Fourth-Quarter Details
- Real GDP: 0.7 percent from 1.4 percent
- Real Final Sales: 0.4 percent from 1.2 percent
- Real Final Private Domestic Sales: 1.9 percent from 2.4 percent
- Real Final Domestic Sales: 0.6 percent from 1.1 percent
- Real GDI: N/A
GDI is delayed by one release in the first three quarters of the year. For the final quarter, GDI is not available until the third release.
Contributions to GDP
Percentage Point Contributions to GDP Detail
- PCE Services: 1.25PP from 1.59 PP
- PCE Goods: 0.07 from -0.01 PP
- Government: -1.03 from -0.90 PP
- Residential Investment: -0.02 from -0.06 PP
- Nonresidential Investment: 0.28 from 0.51 PP
- CIPI: 0.28 from 0.21 PP
- Exports: -0.36 from -0.01 PP
- Imports 0.15 from 0.18 PP
PCE stands for Personal Consumption Expenditures+.
CIPI stands for Change in Private Inventory.
The negative revision was not just one thing.
Key Revisions
- PCE Services: -0.34 PP
- Government: -0.13 PP
- Nonresidential Investment: -0.23 PP
- Exports: -0.35 PP
- CIPI: +0.07 PP
- PCE Goods: +0.08 PP
Other than government, this is a nasty set of revisions.
On March 3, 2026, I commented Expect a Negative Revision to 2025 Q4 GDP. Two Reasons
My first reason was already seen big negative revisions construction spending. My second reason was “But with the economy generally weakening, other revisions rate to be negative as well. That is reason number two.”
This was much bigger to the downside than I called for. It is serious weakening. The Bloomberg consensus was no change.
Real GDP vs GDI in Billions of Dollars
Real GDP and real GDI (gross domestic income) are two measures of the same thing.
Income realized = products sold.
For the first three quarter of the year, GDI is delayed by one release. For the fourth quarter, GDI is only available on the third (final) estimate for the quarter.
Starting in the third quarter of 2022, a big divergence between GDP and GDI developed.
Many economists believe GDI is the better measure. I am in that camp and believe GDP is overstated.
On February 26, 2026 I commented How Much Did AI Spending Contribute to Fourth-Quarter 2025 GDP?
I will revise those numbers shortly.
Biden, a vegetable, averaged 3.7%. I mean, how hard can it be?
During Biden’s term, over 14 million jobs were created.
During Trump’s first Term, the economy lost almost 3 million jobs.
I suspect thatTrump’s second term will see even more job losses than his first term.
Yet if he tweets it often enough, his cult will believe he has the greatest economy ever.
If you don’t like the message, shoot the messenger in 5..4..3..2..1..
So GDP shrank, the Fed can’t cut rates now because of Trump’s war. Inflation is about to explode further straining households.
Credit card debt piling up, people tapping their 401ks all got me thinking.
Trump is likely going to crash the market and take away all the boomers retirement savings.
You reap what you sow MAGA.
Trump tariffs and their impact hitting….wait until the global costs of the war impacts hit…private credit is full of cockroaches and we have the AI bubble out there as well. Everything is priced as if things would be perfect for years.
This could easily play out worse than 2008.
Taco economics as expected.
I seem to recall reading many years ago that (facetiously) if the US and Japan wanted to stimulate their economies, what they should do is build an enormously expensive fleet of ships, tow them to the middle of the Pacific, and then blow up each others ships. So could we be looking at a large increase in GDP next year due to all the munitions that we are consuming which will have to be replaced? I’d rather have the AI spending.
I have a report on AI spending coming up
There is a joke about two economists boosting the economy to new heights by paying each other to eat dog turds.
Conspiracy against our Very Stable Genius president. /s
Not to worry, those in charge of reporting those numbers will be replaced with obedient morons.