US economy grew at 0.5% in fourth quarter
Commerce Department releases final GDP revision for the fourth quarter of 2025
The Acquirers Funds founder and managing director Tobias Carlisle discusses retail sales on Making Money.
This story about the fourth-quarter GDP report is developing and will be updated with more details.
The U.S. economy grew at a slightly slower pace than expected in the fourth quarter, according to the Commerce Department's estimate.
The Bureau of Economic Analysis (BEA) on Thursday released its final reading of fourth-quarter GDP, which showed the economy grew at an annualized rate of 0.5% in the three-month period including October, November and December.
That figure was lower than the expectations of economists polled by LSEG, who had estimated 0.7% GDP growth in the fourth quarter. The figure was initially estimated at 1.4% before it was lowered to 0.7% in the BEA's first revision.
Taken together with the 0.6% GDP contraction in the first quarter of 2025, as well as the increases of 3.8% in the second quarter and 4.4% in the third quarter, the U.S. economy grew at an annual rate of about 2.1% in 2025.
Shipping containers are organized at the Houston Port of Authority on Feb. 10, 2025 in Houston, Texas. (Brandon Bell/Getty Images)
FED'S FAVORED INFLATION GAUGE REMAINED ELEVATED IN FEBRUARY, DELAYED REPORT SHOWS
The BEA reported that the main contributors to the increase in real GDP in the fourth quarter were increases in consumer spending and investment. Those movements were partially offset by decreases in government spending and exports. Imports also decreased in the quarter.
The downward revision of the final Q4 GDP figure to 0.5% from the BEA's first revision of 0.7% was primarily due to investment being revised down. The BEA said that within investment, the downward revision was led by private inventory investment, particularly wholesale trade, based on updated inventory data from the Census Bureau.
Real final sales to private domestic purchasers, which is the sum of consumer spending and gross private fixed investment, rose 1.8% in the fourth quarter after being revised down by 0.1 percentage point from the prior estimate.
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 as well as consumer spending by federal workers whose paychecks were delayed.
BEA is unable to quantify the full effects of the shutdown, though it estimated that the reduction in federal government services reduced real GDP growth in the fourth quarter by about 1 percentage point.