U.S. economy expanded at just 0.7% in fourth quarter

"Growth in gross domestic product - the nation's output of goods and services - was down sharply from 4.4% in last year's third quarter and 3.8% in the second. And the fourth-quarter number was half the government's first estimate of 1.4%; economists had expected the revision to go the other way - and show stronger growth."

"Federal government spending and investment, clobbered by the shutdown, plunged at a 16.7% rate, hacking 1.16 percentage points off fourth-quarter growth."

"A category within the GDP data that measures the economy's underlying strength came in weaker than previously reported, growing at a 1.9% clip, down from 2.9% in the third quarter and from the first estimate of 2.4%."

The U.S. economy grew at only 0.7% annually in the fourth quarter of 2025, a substantial downward revision from the initial 1.4% estimate. This slowdown followed stronger growth of 4.4% in the third quarter and 3.8% in the second quarter. The 43-day government shutdown severely impacted federal spending and investment, which plummeted at a 16.7% rate and reduced overall growth by 1.16 percentage points. Consumer spending decelerated to 2% from 3.5%, while business investment excluding housing grew at 2.2%, likely driven by artificial intelligence investments. Exports declined 3.3% annually. Full-year 2025 GDP growth reached 2.1%, down from 2.8% in 2024.

Read at Fast Company