Commerce Revises Q4 GDP Sharply Down as Core Inflation Rises
Fourth-quarter GDP was revised to a 0.7% annualized rate while core PCE inflation rose to 3.1% in January, complicating Fed policy as energy prices surged after Feb. 28 attacks.
AlterNet'Yikes': Economists sound alarm after GDP revision reveals 'picture not looking good'
CNBCFourth-quarter GDP revised down to just 0.7% growth; January core inflation was 3.1%
SemaforUS GDP growth signals weaker economy than expected
New York PostUS economy grew meager 0.7% in Q4 in big downgrade from initial estimate — here’s why
Overview
The Commerce Department revised fourth-quarter GDP down to a 0.7% annual rate and reported core PCE inflation rose 3.1% in January.
The revision cut GDP from a prior 1.4% estimate and followed a government shutdown that sent federal spending down 16.7%, the Bureau of Economic Analysis said.
Economists warned that weaker growth, persistent PCE inflation and surging energy prices after Feb. 28 attacks raise stagflation risks and complicate Federal Reserve policy.
For all of 2025 GDP grew 2.1%, consumer spending rose 2.0% in the fourth quarter, private domestic sales increased 1.9%, and the personal saving rate rose to 4.5%, according to Commerce reports.
Markets are assigning a near 100% probability that the Federal Open Market Committee will remain on hold at its next rate decision Wednesday, and the BEA's final fourth-quarter GDP report is due April 9.
Analysis
Center-leaning sources frame the story around economic downside by using evaluative terms like "vulnerabilities" and "stagflation," prioritizing worried economists and unexpected job losses, and emphasizing oil-price and gas-pump impacts. Editorial choices highlight pessimistic indicators while treating the analyst's remark as source content, creating a cumulative narrative of emerging weakness.
FAQ
The fourth-quarter GDP was previously estimated at 1.4% annualized rate.
Core PCE inflation is the Federal Reserve's preferred measure, excluding food and energy; it rose to 3.1% in January.
The revision was due to a government shutdown that reduced federal spending by 16.7%.
Markets assign a near 100% probability that the FOMC will hold rates steady at its next decision on Wednesday.
