Slowing down

The BEA published yesterday the thrid and final revision of the U.S. GDP for the fourth quarter of 2025. From the impressive 4.4% of the 3Q25, we went from 1.4% for the initial 4Q25 print, to 0.7% in the second revision, to 0.5% for the final one. All of them are annualized figures. In the chart below you can see the trend. The U.S. economy is slowing down, amd thanks to conflicts, and the rise in oil, we have sticky inflation, perhaps temporary. We have been in the temporary camp before, and it doesn’t go away that easy. Are we entering a stagflation period? Too early to tell, but the weight of debt is starting to matter. $39.1Tn as of this morning. The main reason why GDP slowed down was due to lower government spending (believe it or not). That was reversed when Trump decided to attack Iran, and it will be reflected in 1Q26 number. But that spending boost may also be compensated downward by higher oil prices, when it comes to real GDP growth. The U.S. needs AI to kick in, and it’s not happening.

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