US GDP rose 1.4% in Q4 2025, slower than Q3’s 4.4%, as the government shutdown and softer consumer spending held back growth; 2025 overall expanded 2.2%, helped by resilient consumer demand and firm business investment.Abstract: The U.S. economy finished 2025 with a slowdown, expanding at a 1.4% annualized rate in Q4 after 4.4% in Q3. The year overall grew 2.2%, the weakest since 2020, as the government shutdown and softer consumer demand weighed on activity, while business investment rose. Consumer spending remained the economy’s anchor but was uneven across income groups amid rising debt and inflation. Tariff policies and a slowing labor market shaped the year’s dynamics, though the data suggested momentum could resume in the first quarter of 2026 as policy effects materialize.

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2026-05-15 20:14:02

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US economy slowed sharply in the fourth quarter, expanding at a rate of just 1.4%

Bryan Mena, CNN

Fri, February 20, 2026 at 10:33 PM GMT+9 2 min read

A shopper in the apparel section at a Walmart store on Black Friday in Columbus, Ohio, on November 28, 2025. - Brian Kaiser/Bloomberg/Getty Images

The US economy grew at a much slower pace in the final months of 2025 as the historic government shutdown weighed on economic activity, ending a year that saw the weakest growth since the pandemic.

Still, it was far from the worst-case scenario economists feared when President Donald Trump unveiled his sweeping tariffs last spring. The economy grew in 2025, despite tariffs and one of the weakest stretches of job creation since the Great Recession, largely thanks to wealthy consumers who continued to spend.

Gross domestic product, which measures all the goods and services produced in the economy, registered at an annualized rate of 1.4% from October through December, the Commerce Department said Friday. That’s a marked slowdown from the 4.4% rate in the third quarter, and lower than the 1.9% rate economists projected in a poll by data firm FactSet. GDP is adjusted for seasonal swings and inflation.

Overall, the economy grew by 2.2% in 2025, the slowest pace since 2020.

The fourth-quarter reading was delayed a month because of last year’s government shutdown. Estimates of how much GDP shaved off in the October-through-December period range from half a percentage point to as much as 1.5 percentage points, with economists widely expecting the economy to recoup any losses in the current quarter.

Cuts in federal spending and consumers pulling back slightly on goods purchases took a toll on fourth-quarter GDP, according to the report.

Consumer spending, the lifeblood of the US economy, slowed in the fourth quarter to an annual rate of 1.4%, the weakest pace since early 2025. Over the past year, spending has been uneven by income bracket, with the poorest households buckling under the weight of rising debt, a slowing labor market and cumulative inflation over the past several years.

Meanwhile, business spending edged higher to 3.7% from 3.2% in the prior three-month period.

Stock futures moved lower after the data release. Dow futures were down 111 points, or 0.23%. S&P 500 futures fell 0.3%. Futures tied to the Nasdaq 100 were 0.48% lower.

This story is developing and will be updated.

CNN’s John Towfighi contributed reporting.

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