US: Growth seen slowing as shutdown drags – Deutsche Bank

Deutsche Bank economists expect US real GDP growth to slow to 2.5% in Q4 2025 from 4.4% previously, with much of the deceleration attributed to the record-long government shutdown. Private final sales to domestic purchasers are forecast to cool, while upcoming durable goods and trade data will refine the growth and inventory picture.

Shutdown and inventories temper momentum

"The most consequential updates will land on Friday, when the advance estimate of Q4 GDP arrives alongside December’s personal income and consumption figures—key inputs for shaping expectations for the early part of this year."

"Our economists expect real GDP growth to slow to 2.5% for Q4, a meaningful step down from the prior quarter’s 4.4% pace."

"A sizable portion of that deceleration—roughly 70bps—reflects the drag from the record long shutdown. Net trade is once again projected to make a strong positive contribution, driven mainly by subdued imports."

"December’s international trade report, due Thursday, will help refine the team's call, as will the advanced goods trade data, which will also guide expectations for inventories—currently seen subtracting about 60bps from growth in Q4."

"For markets assessing the underlying pulse of demand heading into 2026, private final sales to domestic purchasers (PFDP) will carry more weight than the headline GDP print. This indicator—closely monitored by Fed Chair Powell—is expected by our economists to slow to 2.0% from 2.9% in Q3, though risks appear tilted upward."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)