US Economy Grew at Sluggish 0.7% in Q4, Revised Down

Commerce Department downgrades initial estimate, citing impact of government shutdown

Mar. 13, 2026 at 12:56pm

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The U.S. economy advanced at a sluggish 0.7% annual rate from October through December, the Commerce Department reported on Friday, a significant downgrade from its initial 1.4% estimate. Growth was hobbled by the 43-day government shutdown last fall, which caused federal spending and investment to plunge 16.7% and shave 1.16 percentage points off fourth-quarter GDP. Consumer spending and business investment also slowed compared to earlier estimates.

Why it matters

The weaker-than-expected GDP growth reflects the lingering impact of the government shutdown on the broader economy, raising concerns about the resilience of the U.S. economy in the face of policy uncertainty and global headwinds like rising oil and gas prices from the war with Iran.

The details

The Commerce Department's revised GDP report showed consumer spending grew at a 2% clip in the fourth quarter, down from 3.5% in the third quarter and the 2.4% initially estimated. Business investment, excluding housing, increased at a 2.2% pace, down from 3.2% in the prior quarter and the initial 3.7% estimate. Exports also fell at a 3.3% annual rate, a bigger drop than first reported.

  • The GDP report covers the fourth quarter of 2025.
  • The initial GDP estimate for Q4 2025 was 1.4%.
  • The revised GDP growth rate for Q4 2025 is 0.7%.
  • For the full year 2025, GDP grew 2.1%, down from an initial estimate of 2.2%.

The players

U.S. Economy

The world's largest economy, which has shown resilience in the face of policy changes but is now facing headwinds from a government shutdown and global tensions.

Commerce Department

The federal agency that released the revised GDP report for the fourth quarter of 2025.

President Donald Trump

The U.S. president whose policies, including import taxes and mass deportations, have impacted the economic outlook.

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What’s next

The Commerce Department will release its final estimate for fourth-quarter 2025 GDP on April 9.

The takeaway

The downward revision to Q4 2025 GDP growth highlights the lingering impact of the government shutdown and other economic headwinds, raising concerns about the broader strength of the U.S. economy as it faces policy uncertainty and global challenges.