2026-02-21
US Q4 GDP Plummets to 1.4% Missing Expectations; Government Shutdown and Weak Exports Main Causes
Core Overview: Significant Economic Cooling, Unexpectedly Worse than Forecast
The US Department of Commerce's latest release shows the 2025 fourth-quarter real GDP seasonally adjusted annual rate (SAAR) was only 1.4%, a sharp decline from the third quarter's 4.4% and significantly lower than the general market expectation of 2.8%–3.0%. This is the slowest growth rate since the first quarter of 2025, indicating that after a strong rebound mid-year, US economic momentum encountered turbulence at year-end, and the recovery strength is not as solid as expected.
Key Details: Domestic Demand Stable, Fiscal and Trade Sectors Drag
Breaking down the data, this GDP slowdown was mainly impacted by two temporary factors:
Plunge in Government Spending: Affected by the federal government shutdown event from October to November 2025, government consumption and investment spending contracted sharply (data shows federal spending fell by 17%), becoming the biggest drag.
Divergence in Consumption and Exports: "Personal Consumption Expenditures (PCE)," which accounts for the largest share of GDP, grew by 2.4%. Although slower than the previous quarter's 3.5%, it maintained positive growth, showing household balance sheets have not yet deteriorated; conversely, export data turned negative, declining by 0.9%.
In-depth Attribution: Atypical Recession, Caused by Policy Interference
According to analyst views compiled by Seeking Alpha and Trading Economics, the "deep freeze" in this data does not entirely reflect a deterioration in fundamentals but was distorted more by fiscal policy interference (government shutdown). An economist at Navy Federal Credit Union pointed out that "Final Sales to Private Domestic Purchasers," which excludes government sector volatility, still grew by 2.4%, indicating that private sector demand remains healthy. The market interprets this data release as "more noise than signal."
Outlook and Risks: Short-term Focus on Rebound Effect, Medium-term Focus on Fed Support
Short-term (1-2 months): As government operations return to normal, the market expects a "technical rebound" in the first quarter of 2026, with the catch-up in government spending potentially pushing GDP back above 2%. However, close attention must be paid to whether consumer confidence is affected by stock market volatility and a cooling job market.
Medium-term (3-6 months): Given that inflation data is gradually under control and the economy is showing signs of fatigue, the market is certain that the Federal Reserve (Fed) will maintain or even accelerate the pace of interest rate cuts in 2026 to prevent the economy from turning from a "soft landing" into a recession. The main risk lies in whether companies begin laying off workers due to worsening profit outlooks, which would hit the sole pillar currently supporting the economy—private consumption.
Web Search References
https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQEJPyCiS6iGtLX4Q6oggndgYpC93-oFNXdluq4JMiOLHsqbN3yRTq_GaL3Kk9cvKdwrcv46PtxYrDHaEfEJMmqyuMfrTWS3gsou6oJdIgxAj7E2vAoshSgx34e1-mn2lrmEuI6626sPGvEEqQTMy8AKCTFfuWS_5CxAl42NAK3hvua6CivyYsBn0cbIQnRyYUc9ewohsBSmGOzl17UMFpYi1o0=
https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQEiYBaokEV9CqF8ZKReCHWqAZBjR9siNJA_FjKu0c4MgsqrZwQsQXr1fBslfiMslEaX61lMoPtwbuT2oorBVMZbFh0OBfYp89me6-NETiHWR0LDELj-bp4yHPjj2YebjRzBIkh9z5W2C5l-GkxBJNeh
https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQGntlULfno25w82Eocp97WlrGIXz9McE1fNrpILrVC9YxFa18d5qhviovl0ThmGypUh4t307gCQXU-0nzVhvE13TZE15Y0rRoILMFKqmak_Qn_GwZt0J3NAyLGlveocK2iOkfQf_PgbK44tFQfo__xXT1DLfSmc4stswmDOovn7JQ2zlllok9Mt6Fe_dbxeaYTOJolne4xf3OzA2Us=