The US economy grew only 1.4 per cent in the fourth quarter of 2025, due to a record government shutdown, reduced consumer spending, and trade tariffs.
Inflation-adjusted gross domestic product (GDP) increased just 1.4 per cent in the fourth quarter of 2025 after witnessing a sharp rise of nearly 4.4 per cent in the third quarter of the previous year, according to the government’s initial estimates released on February 21.
However, the overall economy expanded by 2.2 per cent in 2025, according to data from the US Bureau of Economic Analysis (BEA).
The last weeks of the 2025 economic slowdown were attributed to the government shutdown, the BEA said, adding that the shutdown subtracted about 1 percentage point from GDP. Just an hour before the statistics were released, Trump posted on Truth Social, saying the shutdown would cost the US “at least two points in GDP".
After the weak performance in the last quarter of 2025, the US economy, which was expected to see strong growth going into 2026, is somehow witnessing a slowdown in overall GDP performance.
While the tariff war has not yielded much in the way of results in the current period, the BEA says that the outlook remains strong owing to Trump’s historic trade deal in 2025 and 2026.
According to the monthly BEA data released on Friday, it was revealed that US policymakers aim to control the price index, which rose by 0.4 per cent in December last year.
On an annual basis, the core personal consumption expenditures price index, which excludes food and energy, climbed to 3 per cent, compared with 2.8 per cent at the start of 2025, affecting the pockets of the common man in the country.
This is also reflective of the decreased consumer spending figures recorded since late December as US and Iran tensions piled on pressure on domestic markets.
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