GDP grew meager 0.7% in Q4 in big downgrade from – Business News
The US economic system, hobbled by final fall’s 43-day authorities shutdown, superior at an unexpectedly sluggish 0.7% annual fee from October by way of December, the Commerce Department reported Friday in a big downgrade of its initial estimate.
Growth in gross home product — the nation’s output of items and providers — was down sharply from 4.4% in final yr’s third quarter and three.8% in the second. And the fourth-quarter quantity was half the federal government’s first estimate of 1.4%; economists had anticipated the revision to go the opposite manner — and show stronger growth.
Federal authorities spending and investment, clobbered by the shutdown, plunged at a 16.7% fee, hacking 1.16 proportion factors off fourth-quarter growth.
Growth in gross home product — the nation’s output of items and providers — was down sharply from 4.4% in final yr’s third quarter. Helayne Seidman
For all of 2025, GDP grew 2.1%, strong however down from an initial estimate of 2.2% and from 2.8% in 2024 and a pair of.9% 2023.
In the fourth quarter, client spending grew at a 2% clip, down from 3.5% in the third quarter and the two.4% the federal government had initially estimated. Business investment, excluding housing, elevated at a healthy 2.2% tempo, doubtless reflecting money being poured into artificial intelligence, however the increase was down from 3.2% in the third quarter and from the three.7% advance in the Commerce division’s initial estimate.
Exports fell at a 3.3% annual fee in the fourth quarter, a greater drop than the federal government first estimated.
A class within the GDP information that measures the economic system’s underlying power got here in weaker than beforehand reported, growing at a 1.9% clip, down from 2.9% in the third quarter and from the primary estimate of 2.4%. This class consists of client spending and personal investment, however excludes risky gadgets like exports, inventories and authorities spending.
The US economic system — the world’s largest — has proven shocking resilience in the face of President Trump’s insurance policies, together with sweeping import taxes and mass deportations. Getty Images
“Following two consecutive strong readings for the second and third quarters, the economy was expected to soften heading into year-end. It’s now increasingly clear that the economy not only slowed but stumbled into the finish line,” Jim Baird, chief investment officer at Plante Moran Financial Advisors, mentioned in a commentary.
“The authorities shutdown was actually a main issue in the loss of momentum, however a sharp decline in consumption growth additionally performed a position.’’
The US economic system — the world’s largest — has proven shocking resilience in the face of President Trump’s insurance policies, together with sweeping import taxes and mass deportations. But the conflict with Iran has pushed up oil and fuel costs and clouded the financial outlook.
Meanwhile, the American job market is in a stoop. Last month, corporations, nonprofits and authorities businesses cut 92,000 jobs. In 2025, they added fewer than 10,000 jobs a month, the weakest hiring exterior recession years since 2002.
Friday’s GDP was the second of the three estimates of fourth-quarter growth. The last report is due April 9.
