U.S. Q4 GDP Growth Halved to 0.7% as Government Spending Slides

U.S. gross domestic product (GDP) grew at an annualized rate of 0.7% in the fourth quarter, down from the initial estimate of 1.4%, as the effects of the 43-day government shutdown reduced federal spending, said the Bureau of Economic Analysis (BEA) on Friday. GDP growth fell significantly from 4.4% in the third quarter and 3.8% in the second quarter.

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“The big downward revision in GDP is a gut check going into this energy crunch, increasing the risk of stagflation,” said TradeStation global head of market strategy David Russell.

**GDP Growth Set for Second Consecutive Down Year **

During the fourth quarter, growth in consumer spending and investment was partially offset by lower government spending and exports. Imports, which are subtracted from the GDP calculation, decreased less than previously expected.

For the full year, GDP grew by 2.1% in 2025, down from 2.8% in 2024 and 2.9% in 2023. The BEA is set to release its third and final estimate of fourth-quarter GDP on April 9.

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