Moderate Growth Still Expected For Delayed US Q4 GDP Report
•February 5, 2026
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Why It Matters
The forecast confirms that the U.S. economy continues to grow despite recent turbulence, shaping monetary‑policy decisions and market sentiment. It also tempers recession anxieties, influencing investor confidence and corporate planning.
Key Takeaways
- •Q4 GDP nowcast: 2.7% annualized growth.
- •Q3 growth was 4.4%, indicating slowdown.
- •Dallas Fed WEI signals steady year‑over‑year trend.
- •PMI suggests 1.7% annualized growth in services.
- •Recession risk perceived lower but policy shocks remain.
Pulse Analysis
The postponement of the official Q4 GDP release reflects ongoing government shutdown concerns, but the Capital Spectator’s nowcast provides a timely snapshot of economic momentum. By aggregating real‑time indicators and statistical models, the nowcast estimates a 2.7% annualized growth rate, suggesting that the economy’s expansion has decelerated yet remains solid. This figure, while lower than Q3’s 4.4% surge, aligns with a broader pattern of moderate growth that analysts have observed across multiple data streams.
Supporting the nowcast, the Dallas Federal Reserve’s Weekly Economic Index shows a consistent year‑over‑year trend, reinforcing the view that underlying activity has not stalled. Meanwhile, the latest PMI readings for December and January reveal a services sector buoyed by a notable uptick in manufacturing output, translating to an estimated 1.7% annualized growth rate. Such breadth across sectors underscores the resilience of business investment, which economists like Neil Shearing highlight as a key driver that has withstood heightened uncertainty.
For policymakers and investors, these signals carry weight. A sustained, albeit slower, expansion reduces immediate recession pressures, allowing the Federal Reserve to consider a more measured approach to rate adjustments. Yet, analysts caution that persistent policy shocks—ranging from trade disputes to fiscal constraints—could erode this momentum. Continuous monitoring of leading indicators, such as the WEI and PMI, will be essential to gauge whether the current growth path can weather future headwinds.
Moderate Growth Still Expected For Delayed US Q4 GDP Report
Barring another glitch in the federal government’s on-again-off-again operating schedule, the delayed report for the fourth-quarter GDP report is set for release in two weeks (Feb. 20). When the update arrives, it’s on track to report a softer-but-still-resilient expansion for last year’s final quarter, based on the median for a set of nowcasts compiled by The Capital Spectator.
Today’s update indicates 2.7% annualized growth for Q4. That’s substantially below Q3’s torrid 4.4% pace. Despite the anticipated downshift, the Q4 nowcast, if correct, will reaffirm US economic resilience prevailed through the end of 2025.
Economic data from other sources unaffected by the government shutdown already highlight a strong probability that the economic expansion continued through December into January. The Dallas Fed’s Weekly Economic Index (WEI), for instance, reflects a steady, moderate year-over-year trend in GDP in recent history.
PMI survey data for December and January also suggest that a growth bias endures. “Sustained service sector growth, supported by a robust rise in manufacturing output in January, indicates the economy is growing at an annualized rate of around 1.7%,” says Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
The recession worries of several months back in some circles once again look misplaced. That doesn’t mean that the economy doesn’t face challenges. But US resilience isn’t easily displaced, which is surprising, given the turmoil over the past year on trade, monetary policy, and elsewhere.
“Textbooks would say uncertainty is bad for economic growth, but there’s not much evidence that it’s had a significant impact on the US economy so far,” said Neil Shearing, group chief economist at Capital Economics. “Business investment is the first place you would expect it to show up, but that’s been strong.”
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Exactly why the US growth has held up better than expected will take time to unravel. Meantime, it’s fair to say that 2025 looks set to go into the history books as a year that defied the experts in terms of growth’s persistence.
“If you walked 100 economists in a room one year ago and informed them of these developments today, I suspect virtuallyall would project the US economy would be stagnant at best and cratering at worst,” said Ben Harris, director of economic studies at the Brookings Institution, during a conference last week at the think tank.
He continued: “Why haven’t simultaneous shocks, previously thought to be catastrophic, derailed the economy? I see four possible explanations. The shocks are not as large as some may think, offsetting stimuli compensate for the negative impact, prior understanding the economy is misguided, it will take time to realize the full impact of recent policy decisions. Ultimately, my conclusion is more pessimistic than I would hope for. If these policy shocks persist, their impact will likely be more damaging than what we have observed so far.”
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