MBA Economist Weighs In on Q4 GDP Results

Real gross domestic product increased 1.4% in Q4 2025, the U.S. Bureau of Economic Analysis reported Feb. 20.

The reporting was delayed by the October-November 2025 government shutdown.

Mortgage Bankers Association Vice President and Deputy Chief Economist Joel Kan released the following statement in reaction:

This morning’s advance estimate of fourth quarter GDP showed that economic growth slowed to 1.4% from the robust pace of the second and third quarters of 2025. Overall, the economy in 2025 grew slower than 2024, consistent with weaker hiring across many industry sectors and the upward trend in unemployment. The theme of uneven growth continues to be reflected in the data. While consumer spending was a primary driver of growth in the quarter, spending on goods declined slightly, while all the growth was concentrated in spending on services. Business fixed investment also supported the fourth quarter gain, primarily through increased investment in information processing equipment and intellectual property products. This indicates that companies are still heavily investing in technology. Residential investment contracted for the fourth consecutive quarter.

 We expect a similar pattern of economic growth in 2026, as households with sufficient income and wealth continue to drive most of the consumer spending, while pressure continues to build for other households under strain from higher costs, longer unemployment spells, and high consumer credit balances.

 PCE inflation was 2.8% compared to a year ago, a reacceleration from the third quarter’s 2.6% rate, with the core measure exhibiting a 2.9% increase. Both measures are above the Fed’s target and today’s report, and along with the strong January jobs report, suggest the lower likelihood of a rate cut at the next FOMC meeting.