The U.S. economy expanded at a slower pace than anticipated in the fourth quarter of 2025, growing at an annual rate of 1.4%, according to the Bureau of Economic Analysis (BEA). The growth rate fell short of the 3% forecasted by economists surveyed by LSEG. This marks a significant decline from the 4.4% growth recorded in the third quarter.
The BEA’s report, released on Wednesday, highlighted that consumer spending and investment contributed to the GDP growth, but these gains were offset by decreases in government spending and exports. The report was delayed due to a government shutdown from October to mid-November, which also affected federal spending. The BEA estimated that the shutdown reduced fourth-quarter GDP by about 1 percentage point.
President Donald Trump attributed the slower growth to the shutdown, stating on Truth Social that it “cost the U.S.A. at least two points in GDP.” The shutdown, the longest in U.S. history, lasted 43 days and was a result of disagreements over budget allocations.
Despite the disappointing end to the year, the U.S. economy grew at an annual rate of 2.25% in 2025. Economists like Gregory Daco from EY-Parthenon cautioned that the growth might mask underlying economic fragilities, relying heavily on affluent consumers, AI-driven investment, and asset price appreciation.
Looking ahead, experts expect a modest acceleration in economic growth in 2026, supported by tax refunds and strong business investment, particularly in AI-related sectors. However, lingering inflation pressures could keep the Federal Reserve cautious about adjusting interest rates.
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