📊 Gross Domestic Product (GDP)

To: Institutional Clients

From: Economics Strategy Team

Date: November 2025

Subject: US GDP Analysis: Growth Stalls as Inflationary Pressures Persist

1. Executive Summary

The latest GDP data reveals a concerning divergence between real economic activity and price levels. While the US economy continues to expand in absolute terms, the pace of growth has decelerated sharply, with Real GDP increasing by a marginal 0.12% quarter-on-quarter (q/q) to $24.06 trillion. This stagnation is compounded by a persistent upward trend in the GDP Deflator, which rose 0.92% q/q and 3.30% year-on-year (YoY), suggesting that inflation remains embedded in the domestic economy.

The overall tone is one of "stagflationary lean." The primary engine of growth has shifted entirely to private investment, as government consumption has turned negative and net exports continue to drag on the headline figure. For policymakers, this creates a restrictive environment where the mandate to curb inflation conflicts with a visible slowdown in real output.

2. Five Main Views

• Growth Momentum is Evaporating: Real GDP growth has slowed to a near-standstill, posting a meager 0.12% q/q increase in the most recent quarter, down from more robust gains seen in 2024.
• Inflationary Stickiness: The GDP Deflator has climbed from 126.45 in Oct-24 to 130.62 in Oct-25, representing a 3.30% YoY increase, indicating that price pressures are not yet fully contained.
• Investment as the Sole Pillar: Real Private Investment remains the only consistent growth driver, rising 2.15% YoY ($4.41tn vs $4.32tn), providing a critical floor for the economy.
• Fiscal Retrenchment: Real Government Consumption has entered a contractionary phase, falling 1.44% q/q and 1.17% YoY, suggesting a tightening of public spending or a lag in fiscal implementation.
• Trade Drag Persists: The trade deficit remains a headwind; while imports