Gross domestic product USA (annualized) grew by only 0.5%. in the fourth quarter of 2025 – the Department of Commerce announced on Friday, presenting the final reading. This is another downward revision of these data. At the end of February, the first reading stated that annualized GDP in the last quarter amounted to 1.4 percent, and the second reading from mid-March revised the result to 0.7 percent.
Although the slowdown in the US economy at the end of 2025 is largely due to technical factors – which we discuss in more detail later in the text – in political terms, these are very poor data for President Donald Trump, who promised Americans mountains of gold.
Especially in the context of its weakening ratings, and in November the so-called midterm elections, in which Americans will choose the House of Representatives, as well as 1/3 of the Senate. Rising fuel prices, potentially resulting in higher inflation, and the lack of interest rate cuts in the US are not good news for voters.
Weaker reading from the American economy
The result is much weaker than economists' expectations: the average of forecasts accompanying the first reading at the end of February was 3%. Today's result also means a clear slowdown in the growth dynamics of the American economy, because in the third quarter of 2025, the local GDP increased by 4.4% on an annualized basis. For comparison, in the second quarter of 2025 the dynamics was 3.8 percent, and in the first quarter of 2025 it was negative at the level of 0.6 percent. (due to increased imports for fear of tariff increases).
As Reuters points out, the revision of the growth rate of the American economy in the fourth quarter is the result of, among others, lower estimates of enterprise spending on intellectual products, as well as on inventories.
Growth in consumer spending, which accounts for more than two-thirds of the economy, was revised down to 1.9%. from the previously reported level of 2 percent. Last year's government shutdown was a key factor in the slowdown in growth from 4.4%. in the third quarter.
Reuters estimates that neither the GDP readings for the third nor fourth quarter fully reflect the condition of the world's largest economy. Final sales to private domestic buyers, excluding government, trade and inventory, increased 1.8% in the fourth quarter. This indicator of domestic demand, closely watched by policymakers, was previously estimated at 1.9 percent, and in the third quarter it was 2.9 percent.
The shutdown hampered the US economy
The main factor behind weak US GDP growth was the government shutdown in October and November 2025. (so-called shutdown). Government spending and investment fell sharply by 5.6%. This alone subtracted almost one percentage point from GDP growth.
The chart shows the impact of individual components on GDP dynamics in the fourth quarter of 2025 (percentage points).
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FRED
The Independent Congressional Budget Office previously estimated that the shutdown could reduce GDP in the fourth quarter by 1.5 percentage points. The reasons include fewer services provided by federal workers, lower federal spending on goods and services, and a temporary reduction in benefits under the Supplemental Food Assistance Program. The bureau predicted that most of the lost production would eventually be recovered, but between $7 billion and $14 billion would not be recovered.
See also: Trump miscalculated. We check who has the strongest cards
While growth likely accelerated in the first quarter, the U.S. and Israel's war on Iran, which began in late February, is casting a shadow over the economy. This impact may be visible in rising fuel prices, which translates into higher inflation and a lower propensity to consume. The first data on the pace of price growth in March will be released on Friday afternoon.
Will the US economy and inflation grow faster?
For all of 2025, U.S. real GDP grew 2.1%, a lower growth rate compared to 2.8%. recorded in 2024. This means that in 2025 the world's largest economy generated a GDP of USD 30 trillion. The value of the United States' GDP is approximately 27.5%. world economy.
In its new macroeconomic forecasts presented two weeks ago, the Federal Reserve announced that compared to December, the growth rate was increased by 0.1-0.2 percentage points. GDP growth path (to be 2.4% in 2026, 2.3% in 2027 and 2.1% in 2028) and 1.8% was maintained. in the long term. At the same time, central bank members also expect higher inflation than they predicted in December – the PCE inflation forecast for 2026 has been raised to 2.7%. with 2.4 percent , and by 2027 to 2.2 percent. with 2.1 percent
