U.S. economic growth cooled significantly in the fourth quarter of 2025, which the Trump administration attributed to last fall’s record-long federal government shutdown and softer consumer spending. Gross domestic product rose at a 1.4 percent seasonally adjusted, inflation-adjusted annual rate in the final three months of last year, the Commerce Department said Friday, well below the 2.5 percent pace expected by economists.
The reading marked a steep slowdown from the third quarter’s 4.4 percent gain. Federal government spending fell at a 16.6 percent rate, subtracting nearly 1.2 percentage points from headline GDP. The department said the shutdown’s full impact “cannot be quantified,” though reduced services by federal workers cut about 1 percentage point from real growth.
Even excluding government effects, momentum eased. Business and consumer spending—minus trade, inventories, and government—rose 2.4 percent, the weakest since early 2025. For the year of 2025, GDP increased 2.2 percent, the slowest pace since 2022, as households and businesses turned more cautious.
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