US economy grew slower than expected in fourth quarter
Economists expected US GDP to grow at a 3% rate
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The U.S. economy grew at a much slower than expected pace in the fourth quarter, according to new data released on Wednesday.
The Commerce Department's Bureau of Economic Analysis (BEA) released its advance estimate for fourth quarter gross domestic product (GDP), which found the U.S. economy grew at an annual rate of 1.4% in the fourth quarter, which runs from October through December.
Economists surveyed by LSEG had expected the economy to grow at a 3% rate in the quarter. The fourth quarter's 1.4% growth was slower than the 4.4% GDP growth recorded in the third quarter.
Taken together with the 0.6% GDP contraction in the first quarter of 2025 and the 3.8% increase in second quarter GDP, the U.S. economy grew at an annual rate of 2.25% in 2025. That figure is subject to change as the BEA will release two revisions to the Q4 GDP figure released today as more data comes in.
The BEA noted that the rise in consumer spending and investment boosted real GDP in the fourth quarter, but those gains were partly offset by decreases in government spending on exports. Imports also declined in the quarter.
The report noted that real final sales to private domestic purchasers – which is the sum of consumer spending and gross private fixed investment – rose 2.4% in the fourth quarter, down from an increase of 2.9% in the third quarter.
The release of the report was delayed by the partial government shutdown that ran from October until mid-November, which also affected the GDP data because of its impact on the federal government's spending.
BEA is unable to quantify the full effects of the shutdown, though it did estimate that the reduction in labor services by federal employees reduced fourth quarter GDP by about 1.0 percentage point.
This is a developing story. Please check back for updates.