US Economy Expanded at Sluggish 0.7% in Q4, Government Says

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The U.S. economy grew at an unexpectedly sluggish 0.7% annual rate in the fourth quarter of 2025, the Commerce Department reported on Friday, a sharp downgrade from its initial 1.4% estimate. The slowdown was attributed to the 43-day government shutdown last fall, which led to a 16.7% plunge in federal government spending and investment, as well as weaker consumer spending and exports.

Why it matters

The downgrade in economic growth raises concerns about the overall health of the U.S. economy, which has shown resilience in the face of President Trump's policies but is now facing headwinds from the war with Iran and a slump in the job market. The report will likely factor into the Federal Reserve's monetary policy decisions in the coming months.

The details

The Commerce Department's revised GDP figure for the fourth quarter of 2025 was less than half of the initial 1.4% estimate, and well below the 4.4% growth seen in the third quarter. Consumer spending grew at a 2% clip, down from 3.5% in the prior quarter, while business investment increased at a 2.2% pace, down from 3.2%. Exports also fell at a 3.3% annual rate, a bigger drop than initially estimated.

• The 43-day government shutdown occurred last fall.
• The Commerce Department reported the revised GDP data on March 13, 2026.

What’s next

The final report on fourth-quarter GDP is due to be released on April 9, 2026.