Bankinter | The first reading of Q4 2025 GDP in the US shows growth moderating more than expected to 1.4% annualised quarterly against 2.8% expected and 4.4% previously. However, in year-on-year terms, the decline is milder: 2.2% against 2.3% previously, with consumption at 2.2% against 2.6% previously.
The negative aspect comes from the GDP price deflator, which rose to 3.3% year-on-year against 3.0% previously.
The December Private Consumption Deflator rose unexpectedly to 2.9% annually against expectations of 2.8% and the previous figure, while the underlying rate also accelerated more than expected to 3.0% against expectations of 2.9% and the previous figure of 2.8%.
Analysis team’s view: Negative news for the market. The economic slowdown is not as severe in year-on-year terms, given the partial shutdown of the US government, but inflation has rebounded unexpectedly and is approaching 3%. This gives the Fed no reason to cut rates in the short term. It seems increasingly likely that the next move (-25 bp to 3.25%/3.50%) will not come until June/July.
