Final Commerce Department estimate shows sharp slowdown in late 2025 growth following government shutdown.
By yourNEWS Media Newsroom
The U.S. economy expanded at an annual rate of 0.5% in the fourth quarter of 2025, according to the U.S. Department of Commerce, which lowered its previous estimate of 0.7% growth.
The revised figure reflects a significant slowdown from earlier in the year, when gross domestic product (GDP) increased at a 4.4% annual pace in the third quarter and 3.8% in the second quarter.
A major factor in the weaker performance was a 43-day federal government shutdown during the fall. Federal spending and investment declined at a 16.6% annual rate, reducing fourth-quarter GDP growth by 1.16 percentage points.
Consumer spending, a key driver of economic activity, rose at a 1.9% pace during the quarter. That marked a decline from both the prior estimate and the stronger 3.5% growth recorded earlier in the year.
For the full year, the U.S. economy grew 2.1% in 2025, down from 2.8% in 2024 and 2.9% in 2023.
Economic conditions remain uncertain heading into 2026, with disruptions tied to the U.S.-Israel conflict with Iran contributing to higher energy prices and volatility in global trade.
The labor market showed mixed signals over the past several months. Employers added 160,000 jobs in January, followed by a decline of 133,000 positions in February, before rebounding with 178,000 new jobs in March.
Thursday’s release represents the Commerce Department’s third and final estimate for fourth-quarter GDP. The first estimate of economic growth for the January through March period is scheduled for release on April 30.
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