At first glance, the economic data seemed like a disaster. The annualized GDP number for the fourth quarter of 2025 came in at only 1.4% annualized growth, according to the Bureau of Economic Analysis. That was far below the projected 2.5% from the Dow Jones survey of economists, let alone the 4.4% of Q3.
"Q4 GDP at just 1.4% confirms the economy slowed more than expected—but it didn't stall," said Gina Bolvin, president of Bolvin Wealth Management Group, in emailed remarks.
"Growth came in well below forecasts, and while the government shutdown played a role, momentum clearly cooled into year-end."
However, context matters. The main culprit behind the grim GDP numbers was the federal government shutdown. Its activity is important to the economy and, depending on which estimate you use, it could have cut between 0.9 and 1.5 percentage points. Perhaps the Q4 GDP range would have been between 2.3% and 2.9%, if not for the shutdown.
"The bigger story is the 2.4% growth in real sales to private domestic purchasers because that tells you that households and businesses are still on solid footing," says Dr. Brad Case, chief residential economist at Homes.com.
He adds that incomes are rising faster than home prices, "which ultimately creates a healthier dynamic for the housing market."
However, according to wage growth data from the Federal Reserve Bank of Atlanta, while that may be true for those in the upper quintiles, it isn't for those in the middle and lower, making the overall picture murkier.
As Bolvin also pointed out, PCE inflation for December 2025 was 2.9%. "The Fed's job isn't finished," she says. "That combination—slower growth with still-sticky inflation—keeps policymakers cautious and markets measured."
"We've now had surprises — both positive and negative — in quite a few of the economic performance statistics released by multiple government agencies during the past few months."
Greg Willett, chief economist at LeaseLock, tells GlobeSt.com. "Maybe we need to move past digging into the details of each individual metric and ask whether there's a bigger picture challenge."
"For commercial real estate, the lack of clarity that has emerged when measuring the economy's overall progress causes some anxiety when forecasting near-term demand. However, in most cases, supply volumes are not over the top, or at least are moderating, so there's room for market conditions to tighten even if product absorption capacity comes in a little below the ideal level."
It remains to be seen if we will continue to see slower GDP growth, followed by higher inflation, which translates to stagflation. But for now, perhaps this is temporary, with the government shutdown causing headaches.
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