US Q4 Real GDP Annualized QoQ Final Estimate Revised Down to 0.5%, Economy Slows More Than Expected

The US economy performed below expectations in the fourth quarter of last year, with final data showing a downward revision in growth.

Data released by the US Department of Commerce shows that the final annualized quarterly rate of real GDP in the fourth quarter was 0.5%, which was lower than the market expectation of 0.7% and also lower than the preliminary reading of 0.7%. This downward revision reflects that economic momentum in the quarter was weaker than previously estimated.

At the same time, the final annualized quarterly rate of the core Personal Consumption Expenditures (PCE) price index, a measure of inflationary pressure, was recorded at 2.7%, which was in line with market expectations and the preliminary reading, with no surprises.

Despite the GDP data for the fourth quarter falling short of expectations, White House National Economic Council Director Hassett stated that the US economy is still expected to achieve 4% to 5% growth in 2025.

The slower-than-expected economic growth is unlikely to change the Federal Reserve's stance of continued observation. Currently, in addition to tariff disputes, artificial intelligence uncertainties, and threats to independence, the energy supply shock triggered by the war in Iran has become the latest challenge for monetary policymakers.

Former New York Fed President and Bloomberg columnist Bill Dudley believes that the Federal Reserve will choose to wait and see until the scale and duration of the shock become clearer.

Oil prices previously broke above $100 per barrel, and the year-on-year inflation rate, as measured by the Personal Consumption Expenditures price index, may approach 4% in the coming months. Meanwhile, the strong growth in US nonfarm payrolls in March shows that the economy still has resilience, which to some extent offsets the short-term drag from rising energy prices.