US Economy Grew Slower Than Expected In Final Quarter Of 2025

Catenaa, Friday, February 20, 2026- The US economy grew by 1.4% of GDP, at a slower pace than expected in the fourth quarter of 2025.

New data from the Bureau of Economic Analysis published on Friday showed the economy grew at an annualized rate of 1.4% in the final three months of 2025. 

Economists had expected GDP to grow at an annualized rate of 2.9% in the fourth quarter.

Friday’s report was scheduled for release on January 29, but data collection was delayed by the government shutdown that covered all of October and parts of November.

The shutdown also weighed on economic growth.

Government spending fell at an annualized rate of 5.1% in the fourth quarter, which took 0.9 percentage points off the headline growth rate. Federal government spending fell at an even faster rate,16.6%, and alone contributed to a 1.15 percentage point drop in headline growth.

In a post on Truth Social ahead of the report, President Trump said the 43-day shutdown last fall cost the US economy “at least two points in GDP.” The president again called for lower interest rates.

In its release on Friday, the BEA said that “the deceleration in real GDP in the fourth quarter reflected downturns in government spending and exports and a deceleration in consumer spending that were partly offset by an acceleration in investment.”

Underlying spending trends, however, remained solid, with real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increasing 2.4% in the fourth quarter, compared with 2.9% in the third quarter.

Within that 2.4% rise in consumption, however, a sharp divide emerged in the quarter between goods and services, with services spending rising at a 3.4% rate and goods spending actually falling 0.1%.

For the year, the US economy grew 2.2%, a modest slowdown from the 2.8% growth seen in 2024.