Real GDP rose at an annualized rate of 1.4% in the fourth quarter, missing the expected 2.8%.

Federal government spending declined at a 16.6% rate in the fourth quarter, shaving nearly 1.2 percentage points off headline GDP. Shutdowns can squeeze the economy in many ways, from missed paychecks for hundreds of thousands of federal employees to government contractors losing out on business.

U.S. economic growth slowed in the final three months of last year, dragged down by the six-week shutdown of the federal government and a pullback in consumer spending. The nation's gross domestic product — the total output of goods and services — increased at a 1.

The US economy grew at an annualised rate of just 1.4 per cent in the fourth quarter, as the longest federal shutdown hit government spending, while a crucial inflation measure crept higher. Friday’s figure from the Bureau of Economic Analysis was sharply down from 4.

U.S. economic growth slowed in the fourth quarter of 2025, largely due to the impact of a 43-day government shutdown in the fall that reduced federal spending. But the underlying trend suggests little need for the Federal Reserve to lower interest rates to fuel growth.

Q4 U.S. GDP (first estimate): +1.4%, annual rate, vs. +2.8% consensus and +4.4% in the prior quarter. Personal consumption expenditures: +2.4%, annual rate, vs. +2.4% consensus and +3.5% prior.