BEA: 43-day shutdown, trade and inventories slowed growth; core PCE +0.4% m/m—context for Q4 2025 GDP growth, core PCE inflation, Federal Reserve rate cuts.
What to Know:
- BEA reports GDP growth at 1.4% after shutdown curbs activity.
- Reduced federal spending and shutdown dragged overall growth in Q4.
U.S. real GDP grew at a 1.4% annualized pace in Q4 2025, down from 4.4% in Q3, according to the Bureau of Economic Analysis (BEA). The downshift marked a notable late-year deceleration in overall activity.
A 43-day government shutdown in the fall reduced federal activity and weighed on output, as reported by Barron’s. Lower federal spending was a visible drag on the quarter’s headline growth.
Why it matters: sticky core PCE keeps Fed cautious on cuts
Headline and core PCE inflation each rose 0.4% in December, with core near 3.0% year-over-year, according to the Associated Press. These stickier readings help explain why policymakers may remain cautious about the timing of rate cuts.
Treasury yields rose and rate cut expectations shifted later following the data, according to markets.financialcontent.com. Risk assets softened as models were recalibrated to reflect more persistent inflation.
“We’re on the precipice of recession,” said Mark Zandi, chief economist at Moody’s Analytics. The assessment reflects growing caution as growth cools while price pressures prove slower to recede.
Beneath the headline: stronger real final sales signal demand
Real final sales to private domestic purchasers rose at a stronger clip than headline GDP, excluding inventories, trade, and government spending, according to Axios. This under-the-hood gauge points to firmer private demand than the top line alone implies.
Such divergence indicates demand may be more resilient even as policy-sensitive sectors and federal outlays cool. It also underscores why rate decisions will likely stay data-dependent as inflation and growth signals diverge.
At the time of this writing, Barrick Mining Corporation (NYSE: B) traded near 48.28 on a delayed NYSE quote, within a 52-week range of 17.00 to 54.69, based on NYSE data.
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