The United States’ gross domestic product growth fell well below estimates last quarter due to the government shutdown and slowing consumer spending, while inflation continued to rise.
GDP increased at an annualised rate of 1.4% in the December quarter, the U.S. Bureau of Economic Analysis (BEA) said. Dow Jones estimates had included growth of 2.5%.
“Compared to the third quarter, the deceleration in real GDP in the fourth quarter reflected downturns in government spending and exports and a deceleration in consumer spending that were partly offset by an acceleration in investment,” according to the BEA.
The 43-day government shutdown in November and December weighed heavily on the U.S. GDP last quarter. “BEA estimates that this reduction in services provided by the federal government subtracted about 1.0 percentage point from real GDP growth in the fourth quarter,” the bureau wrote.
Across 2025, U.S. GDP grew by 2.2%, slowing from 2024’s 2.8% increase.
The sum of consumer spending and gross private investment rose by just 2.4% in the fourth quarter, falling from 2.9% growth in the third quarter.
The personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation gauge, was up 2.9%, well above the Fed’s 2% inflation target. It had increased by 2.8% in the prior quarter.
The PCE price index also grew by 2.9% year-over-year in December, the BEA said separately. The core PCE price index, which excludes food and energy, gained 3% that month.
