WASHINGTON (AP) — The U.S. economic system, hobbled by final fall’s 43-day authorities shutdown, superior at an unexpectedly sluggish 0.7% annual fee from October via December, the Commerce Division reported Friday in a giant downgrade of its preliminary estimate.
Progress in gross home product — the nation’s output of products and providers — was down sharply from 4.4% in final yr’s third quarter and three.8% within 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 means — and present stronger development.
Federal authorities spending and funding, clobbered by the shutdown, plunged at a 16.7% fee, hacking 1.16 proportion factors off fourth-quarter development.
For all of 2025, GDP grew 2.1%, stable however down from an preliminary estimate of two.2% and from 2.8% in 2024 and a couple of.9% 2023.
Within the fourth quarter, shopper spending grew at a 2% clip, down from 3.5% within the third quarter and the two.4% the federal government had initially estimated. Enterprise funding, excluding housing, elevated at a wholesome 2.2% tempo, probably reflecting cash being poured into synthetic intelligence, however the enhance was down from 3.2% within the third quarter and from the three.7% advance within the Commerce division’s preliminary estimate.
Exports fell at a 3.3% annual fee within the fourth quarter, a much bigger drop than the federal government first estimated.
A class throughout the GDP knowledge that measures the economic system’s underlying energy got here in weaker than beforehand reported, rising at a 1.9% clip, down from 2.9% within the third quarter and from the primary estimate of two.4%. This class contains shopper spending and personal funding, however excludes unstable objects like exports, inventories and authorities spending.
“Following two consecutive sturdy readings for the second and third quarters, the economic system was anticipated to melt heading into year-end. It’s now more and more clear that the economic system not solely slowed however stumbled into the end line,” Jim Baird, chief funding officer at Plante Moran Monetary Advisors, mentioned in a commentary. “The federal government shutdown was definitely a significant factor within the lack of momentum, however a pointy decline in consumption development additionally performed a task.″
The U.S. economic system — the world’s largest — has proven stunning resilience within the face of President Donald Trump’s insurance policies, together with sweeping import taxes and mass deportations. However the battle with Iran has pushed up oil and gasoline costs and clouded the financial outlook.
In the meantime, the American job market is in a stoop. Final month, firms, nonprofits and authorities businesses lower 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 development. The ultimate report is due April 9.