Market expectations widely suggest that while the U.S. economy maintained a degree of resilience by the end of 2025, its growth rate in the fourth quarter likely slowed markedly compared to the previous quarter. The Bureau of Economic Analysis (BEA) is scheduled to release the initial estimate for inflation-adjusted Gross Domestic Product (GDP) for the fourth quarter of 2025 at 21:30 Beijing Time on Friday. According to the consensus from a FactSet survey of economists, U.S. real GDP is projected to have grown at an annualized rate of 1.9% in the fourth quarter, significantly lower than the 4.4% growth recorded in the third quarter. Media consensus forecasts are relatively more optimistic, anticipating an annualized GDP growth rate of 2.8% for the fourth quarter, though this also falls short of the previous quarter's level. Analysis indicates that the divergence between different forecasts stems partly from differing assessments regarding ongoing shifts in trade flows and the impact of the government shutdown. The government shutdown, which began on October 1st and lasted 43 days, was the longest in U.S. history, during which federal spending was significantly constrained, acting as a drag on fourth-quarter GDP. Structurally, consumer spending remained the primary driver of economic growth in the fourth quarter, albeit with moderating momentum. Retail sales data indicates that the rebound in consumer activity was primarily concentrated in October and November, while December figures tended to flatten. Oliver Allen, Senior U.S. Economist at Pantheon Macroeconomics, expects annualized consumer spending growth in the fourth quarter to be around 2.5%, down from 3.5% in the third quarter. He noted that despite the slowdown, the U.S. economy retained considerable underlying momentum heading into the year-end. Overall, economists generally anticipate that the fourth-quarter performance will keep the full-year 2025 GDP growth rate around 2%, which is viewed as a relatively healthy range. Regarding investment, markets expect modest growth in private fixed investment for the fourth quarter, while government spending and residential investment remain under pressure. Economists at Goldman Sachs project that, affected by the government shutdown, government spending in the fourth quarter fell at an annualized rate of 17.5% compared to the third quarter, potentially subtracting as much as 1.1 percentage points from GDP growth. Trade factors also exerted pressure on fourth-quarter economic growth. According to data released by the U.S. Census Bureau on Thursday, the U.S. trade deficit widened to $70.3 billion in December, up from $53.0 billion in November, primarily driven by increased imports and decreased exports. Oren Klachkin, Financial Market Economist at Nationwide, pointed out that 2025 tariff policies caused significant fluctuations in trade flows, particularly on the import side. However, for the full year, the trade deficit narrowed by only $2.1 billion year-over-year, a decrease of approximately 0.2%. Specifically for December, net exports decreased by about $5 billion, largely related to the ongoing normalization of gold exports. Veronica Clark, an economist at Citi, stated that stronger imports would technically weigh on economic growth, and the contribution of net exports to fourth-quarter GDP could turn into a larger negative factor, or at least provide a smaller positive contribution. Klachkin also noted that as the peak impact of tariffs on the economy has likely passed, trade activity in 2026 is expected to return to a more predictable pattern, thereby reducing disruptions to macroeconomic data.
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