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The U.S. economy grew at a 0.7% annual rate in the fourth quarter of 2025, sharply below the government’s initial estimate of 1.4%, with a 43-day federal government shutdown and weaker consumer spending weighing on activity. The Commerce Department said federal government spending and investment fell 16.7%, cutting more than one percentage point from growth. Consumer spending rose 2%, slower than the previous quarter’s 3.5%, while business investment increased 2.2%, supported partly by spending related to artificial intelligence. Exports declined 3.3%, further dragging on growth. For 2025 as a whole, the economy expanded 2.1%, slightly below earlier estimates and slower than 2.8% growth in 2024. Economists said the data suggest the economy lost momentum toward the end of the year, although the final estimate for fourth-quarter GDP will be released in April.
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