U.S. Economy Expands Just 1.4 Percent in Q4 2025
The slowdown was driven by a combination of cooling consumer spending and a federal government shutdown that paralyzed activity through the first half of the quarter. The Commerce Department — whose own data release was delayed a month due to the shutdown — estimated the closure likely stripped roughly one percentage point from overall growth.
For the full year, the economy grew 2.2 percent, down from 2.8 percent in 2024. Inflation remained a persistent concern, with the core personal consumption expenditures price index climbing 3 percent in December — well above the Federal Reserve's 2 percent target.
Dean Baker, co-founder of the Center for Economic and Policy Research, told Xinhua that the shutdown and layoffs carried out by the Department of Government Efficiency (DOGE) were major contributors to the disappointing figures.
President Donald Trump had foreshadowed the weak numbers ahead of Friday's release, placing blame squarely on the partial government closure that ended in November.
"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!" Trump posted on social media, also taking aim at Fed chief Jerome Powell for not cutting interest rates more aggressively.
The Fed reduced its benchmark rate by three-quarters of a percentage point late last year but has since adopted a more cautious stance given lingering inflation risks.
Looking to 2026, economists remain divided. Gary Clyde Hufbauer of the Peterson Institute for International Economics projects first-quarter GDP near 2 percent and full-year growth of around 2.5 percent, with unemployment potentially climbing to 4.8 percent from January's 4.3 percent.
Baker anticipates mid-2 percent growth but flagged significant uncertainty, warning that tariff policy and the trajectory of the AI sector could drastically alter the outlook — particularly if an AI bubble were to burst. Many analysts already consider tech valuations inflated by excessive optimism surrounding artificial intelligence development.
Legal Disclaimer:
MENAFN provides the
information “as is” without warranty of any kind. We do not accept
any responsibility or liability for the accuracy, content, images,
videos, licenses, completeness, legality, or reliability of the information
contained in this article. If you have any complaints or copyright
issues related to this article, kindly contact the provider above.
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
