US Q4 GDP 1.4% Misses Forecast, Inflation Stays High
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- U.S. GDP grew at an annualized 1.4% in Q4 2025, missing the 2.5% Dow Jones forecast.
- Commerce Department estimated the Oct 1‑Nov 12 shutdown shaved roughly 1 percentage point from Q4 growth.
- Personal consumption expenditures rose only 2.4% in the quarter, down from 3.5% in Q3, indicating slower consumer spending.
- Exports fell 0.9% after a 9.6% surge in the prior quarter, contributing to the GDP deceleration.
- Core PCE price index rose 3% in December, matching forecasts but staying well above the Fed’s 2% target.
- Federal Reserve cut its benchmark rate by 0.75% in late 2025, then signaled a more cautious stance amid persistent inflation.
- Chris Rupkey said the shutdown was a one‑off drag on growth, while Heather Long highlighted resilient demand from AI‑driven sectors and strong private‑domestic sales.
Why it matters: The 1.4% Q4 growth miss quantifies the economic toll of the Oct‑Nov shutdown—estimated at about one percentage point—while inflation stays above the Fed’s 2% goal, limiting fiscal flexibility and keeping borrowing costs elevated for businesses and households, and could pressure the Fed to hold rates steady.
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