The Atlanta Fed’s initial GDPNow estimate for Q1 2026 real GDP growth came in at 3.1% (annualized) as of February 20, pointing to a solid start to the year.
At the same time, the advance estimate for Q4 2025 GDP, released today by the Bureau of Economic Analysis, showed growth of just 1.4% — a notable downside surprise. That figure came in 1.6 percentage points below the final GDPNow nowcast for the quarter, and well under the Atlanta Fed’s earlier 3.0% forecast.
The miss wasn’t limited to the model. Economist expectations were also higher, with a Reuters survey showing estimates ranging from 1.5% to 4.2%, and an average forecast of 3.0%. The gap between the modeled and actual Q4 outcomes highlights the recent volatility in growth dynamics, even as early Q1 tracking suggests a potential reacceleration in economic activity.
In Q4 2025 U.S. GDP – Key Summary
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Q4 real GDP (advance): +1.4% annualized
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Q3 final GDP: +4.4% (sharp slowdown into Q4)
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Consumer spending (PCE): +2.4%
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Final sales to domestic purchasers: +1.2% vs +2.6% expected (weaker underlying demand)
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Core PCE inflation: +2.7% vs +2.6% expected (firmer than forecast)
A visual of the contributions showed Consumers spending and investment added to growth but Government, and net trade were drags
Takeaways
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Growth slowed markedly from Q3, weighed down by government spending and a sharp drop in the contribution from net exports.
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Domestic demand (final sales) came in weaker than expected.
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Core inflation ran slightly hotter than forecasts, alongside the December PCE data released simultaneously.
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2025 full-year GDP growth: ~2.23%.
