GDP Grew at 1.4% Rate in Q4 2025

Washington, DC, February 20, 2026-Real gross domestic product (GDP) increased at an annual rate of 1.4% in Q4 2025 (October, November, and December), according to the advance estimate released by the U.S. Bureau of Economic Analysis. 

In Q3, real GDP increased 4.4%. 

The contributors to the increase in real GDP in the fourth quarter were increases in consumer spending and investment.

"The U.S. economy grew more slowly the fourth quarter of last year, weighed down by last fall’s record-long government shutdown and slower consumer spending,” reports the Wall Street Journal.

“Economists surveyed by The Wall Street Journal expected a 2.5% reading.

“The quarterly reading was a sharp slowdown from the summer’s blistering 4.4% rate. Federal government spending declined at a 16.6% rate in the fourth quarter.

“In 2025, the economy grew 2.2%, measured from the fourth quarter of the prior year. That was slower than 2.4% growth in 2024 and the weakest since 2022. Economists surveyed by the Journal last month expected growth of 2.3% for 2025.

“Economists also measure the year in another way-comparing the nation’s total output for 2025 with the prior year-to get a look at broader trends. According to that measure of annual growth, the economy grew 2.2% last year, down from 2.8% in 2024.

“The Commerce Department said the full effect of the government shutdown stretching from Oct. 1 through Nov. 12 ‘cannot be quantified.’ But one measurement-the reduction in services provided by federal government workers-carved about one percentage point from inflation-adjusted GDP growth in the recent quarter.

“Before Friday’s GDP report was released, President Trump took to social media and blamed Democrats for the shutdown and for hurting GDP. He also lashed out again at Federal Reserve Chair Jerome Powell for not lowering interest rates more.

“Friday’s report caps a year in which GDP recovered from a mild contraction in the first quarter to stronger levels of growth in the second and third quarters. U.S. growth remains the envy of many developed nations. 

“Businesses front-running the Trump administration’s tariffs caused a surge in imports in early 2025, which weighed on GDP because foreign-made imports subtract from the calculation of economic growth. But solid consumer spending and strong investment in artificial intelligence helped the economy keep growing in later quarters. 

“The U.S. economy is expected to grow 2.2% in 2026, according to the most recent Wall Street Journal survey of economists, thanks to continued investments in AI as well as tax cuts and incentives from last summer’s tax-and-spending megabill. A weaker dollar should help American exporters.”