- Compared to Q3, the deceleration in real GDP in Q4 also reflected a pullback in consumer spending, which was partly offset by an acceleration in investment.
- Among services, health care and international travel were the leading contributors to the increase in consumer spending during the quarter.
- The BEA report noted that the U.S. economy grew at a slower pace in 2025 at 2.2%, compared to the 2.8% in 2024.
The United States’ gross domestic product (GDP) for the fourth quarter (Q4) grew at a slower pace than expected, reflecting a downturn in government spending and exports.
The Bureau of Economic Analysis reported that the U.S. economy grew at an annualized rate of 1.4%, lower than the Dow Jones forecast of 2.5%, as cited by MarketWatch.
The third-quarter (Q3) GDP growth estimate was revised upward to an annualized rate of 3.8%, according to a September BEA report.
Compared to Q3, the deceleration in real GDP in Q4 also reflected a pullback in consumer spending. The BEA stated that this was partly offset by an acceleration in investment.
Among services, health care and international travel were the leading contributors to the increase in consumer spending during the quarter.
GDP Growth Slows Down In 2025
The BEA report noted that the U.S. economy grew at a slower clip in 2025 at 2.2%, compared to the 2.8% in 2024.
The key drivers of the U.S. economic growth during 2025 were consumer spending and investment.
Meanwhile, inflation picked up in the fourth quarter, the BEA report showed. The Fed’s primary inflation gauge, the Personal Consumption Expenditures (PCE) price index, rose 2.9% during Q4, compared to an increase of 2.8% in Q3.
Core PCE, which excludes food and energy, rose 2.7% in Q3, compared to Q3’s 2.9% increase.
Trump Blames Shutdown For Slower Growth
Prior to the release of the GDP data, President Donald Trump blamed the shutdown for the slower growth during the quarter.
“The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again. No Shutdowns!” he said in a post on Truth Social, while calling for lower interest rates.
Meanwhile, U.S. equities declined in Friday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 0.33%, the Invesco QQQ Trust ETF (QQQ) fell 0.43%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.35%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.
The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.03% at the time of writing.
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