US Economic Growth Slows in Fourth Quarter

Government shutdown and consumer pullback weigh on GDP

Mar. 1, 2026 at 3:31am

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America's gross domestic product increased at a 1.4% annual rate in the fourth quarter, down from 4.4% in the previous quarter, according to the Commerce Department. The slowdown was driven by the six-week federal government shutdown and a pullback in consumer spending, though underlying growth in consumer and business spending remained "reasonably solid", economists said.

Why it matters

The weaker-than-expected economic growth in the fourth quarter points to a more modest pace of growth in the coming quarters, as consumers take on more debt and cut back on saving to maintain their spending. The report also highlights an odd aspect of the U.S. economy - steady growth without much job creation, which economists attribute to factors like the Trump administration's crackdown on immigration and the potential impact of artificial intelligence on hiring.

The details

The sharp slowdown in government outlays due to the shutdown shaved a full percentage point from growth. Consumer spending rose 2.4%, a solid increase but notably below the third quarter's 3.5% gain. Federal government outlays plunged nearly 17% amid the shutdown, but that decline should mostly reverse in the coming quarters. The outsize growth last summer and fall partly reflected sharply lower imports, which had little impact at the end of last year.

  • The U.S. GDP increased at a 1.4% annual rate in the fourth quarter of 2025.
  • In the third quarter of 2025, GDP grew at a 4.4% annual rate.
  • In the second quarter of 2025, GDP grew at a 3.8% annual rate.

The players

Martha Gimbel

Executive director of the Budget Lab at Yale and former economist in the Biden White House.

Jerome Powell

Federal Reserve Chair.

Donald Trump

Former U.S. President.

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What they’re saying

“This is not a disastrous report.”

— Martha Gimbel, Executive director of the Budget Lab at Yale and former economist in the Biden White House

“The Democrat Shutdown cost the U.S.A. at least two points in GDP. That's why they are doing it, in mini form, again. No Shutdowns! Also, LOWER INTEREST RATES. 'Two Late' Powell is the WORST!!!”

— Donald Trump

What’s next

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The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.