Real GDP rose at an annualized rate of 1.4% in the fourth quarter, missing the expected 2.8%.

Federal government spending declined at a 16.6% rate in the fourth quarter, shaving nearly 1.2 percentage points off headline GDP. Shutdowns can squeeze the economy in many ways, from missed paychecks for hundreds of thousands of federal employees to government contractors losing out on business.

America’s gross domestic product was dragged down by the six-week shutdown of the federal government and a pullback in consumer spending.

America’s gross domestic product — the nation’s output of goods and services — increased at an 1.4% annual rate in the fourth quarter, the Commerce Department reported Friday, down from

U.S. economic growth slowed more than expected in the fourth quarter, with government spending posting its biggest decline since 1972 because of last year's shutdown, but steady consumer and business outlays underscored the economy's resilience.

U.S. economic growth slowed in the fourth quarter of 2025, largely due to the impact of a 43-day government shutdown in the fall that reduced federal spending. But the underlying trend suggests little need for the Federal Reserve to lower interest rates to fuel growth.

The nonpartisan Congressional Budget Office estimated the government shutdown would subtract 1.5 percentage points from fourth-quarter GDP.

The US economy grew at an annualised rate of just 1.4 per cent in the fourth quarter, as the longest federal shutdown hit government spending, while a crucial inflation measure crept higher. Friday’s figure from the Bureau of Economic Analysis was sharply down from 4.