:max_bytes(150000):strip_icc()/GettyImages-2253312701-ef270233b5554656b53b784965b227ce.jpg "What To Expect From Friday’s Report On Economic Growth")
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Key Takeaways
- The GDP likely grew at an annual rate of 2.5% in the fourth quarter, a slowdown from 4.4% growth in the third quarter, according to forecasts.
- The nation’s economic output fell due to the record-long government shutdown last fall.
- The projected growth rate is a middle-of-the-road figure that suggests the economy will continue to expand at a healthy clip.
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The economy is likely increasing at a healthy clip, avoiding both a tariff-driven slump and an AI-fueled boom.
The Bureau of Economic Analysis is expected to report Friday that the inflation-adjusted gross domestic product grew at an annualized rate of 2.5% in the fourth quarter, down from 4.4% in the third quarter, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.
A report in line with expectations would show that the economy continued to expand thanks to the massive investments in data centers that are fueling the AI arms race. The AI bump could help offset the effects of the record-long government shutdown, but it likely won’t be large enough to signal a major economic boost.
What This Means For The Economy
GDP growth in line with expectations would indicate the economy is staying resilient despite the uncertainty during the last year.
“Mathematically, if output grows faster than employment, productivity is rising, possibly because of AI. However, we doubt real GDP will continue growing at 3.0%+ and expect slower growth for Q1,” Brian Wesbury, chief economist at First Trust, wrote in a commentary. “It’s much too early to declare the start of a new technology-driven boom.”
GDP is also likely to fall far short of the 15% growth rate President Donald Trump predicted in a recent interview.
Still, another quarter of solid growth would represent a rebound from the first quarter, when the economy shrank on paper because companies ramped up imports in advance of Trump’s tariff campaign. (Imports count against the GDP in the BEA’s calculations.)
And it would mean 2025 closed out with an average growth rate rather than the downturn that many experts feared last year when Trump announced his plans to impose tariffs on nearly every U.S. trading partner. Tariffs have still had a significant economic impact, but a pullback from their initial announced levels, along with numerous exemptions, has reduced it.
“For the full year, estimated growth of 2.2% would mark a step back from 2024’s 2.8% rate, but it’s still a far better outcome than feared at the height of the trade war,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary.
Friday’s figures will be an advance estimate that the bureau will revise twice as new data comes in, and will finalize in April.
