The US economy slowed sharply to 0.7% growth in late 2025, weighed down by a lengthy government shutdown, weaker consumer spending, and declining exports.
WEBDESK – Act Global Media
The US economy expanded at a much slower pace than previously estimated in the final quarter of 2025, with growth revised down to just 0.7%, according to new data released by the U.S. Department of Commerce.
The downgrade marks a sharp drop from the government’s earlier estimate of 1.4% and comes as the economy struggled with the effects of last year’s 43-day federal government shutdown.
Economic growth, measured by Gross Domestic Product, slowed significantly from 4.4% in the third quarter of 2025 and 3.8% in the second quarter, signaling a clear loss of momentum heading into the end of the year.
Shutdown hits government spending
Federal government spending and investment plunged at a 16.7% annual rate during the quarter, shaving 1.16 percentage points off overall economic growth.
The prolonged shutdown disrupted government operations, halted federal spending programs and contributed heavily to the slowdown in overall economic activity.
For the full year 2025, the U.S. economy grew 2.1%, slightly below the government’s earlier estimate of 2.2% and slower than 2.8% growth in 2024 and 2.9% in 2023.
Consumer spending loses momentum
Consumer spending — a major driver of the U.S. economy — also weakened during the quarter.
Spending increased at a 2% annual rate, down from 3.5% in the third quarter and below the government’s initial estimate of 2.4%.
Business investment excluding housing rose at a 2.2% pace, partly reflecting continued spending on artificial intelligence technologies. However, that figure was also revised down from the earlier estimate of 3.7% growth.
Meanwhile, exports fell at a 3.3% annual rate, a larger decline than previously estimated.
Underlying economic strength softens
A key measure that tracks the economy’s core strength — combining consumer spending and private investment while excluding volatile categories such as exports and inventories — grew at 1.9%, down from 2.9% in the previous quarter.
Economists say the data suggest the economy stumbled toward the end of the year.
“Following two consecutive strong readings for the second and third quarters, the economy was expected to soften heading into year-end,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “It’s now increasingly clear the economy not only slowed but stumbled into the finish line.”
Uncertainty clouds outlook
Despite the slowdown, the U.S. economy has shown resilience in the face of policies introduced by President Donald Trump, including sweeping import tariffs and strict immigration enforcement.
However, the ongoing conflict with Iran has pushed up oil and gas prices, adding new uncertainty to the economic outlook.
The labor market has also weakened. Employers cut 92,000 jobs last month, and job growth averaged fewer than 10,000 new positions per month in 2025, the weakest hiring pace outside a recession since 2002.
The Commerce Department will release its final estimate of fourth-quarter economic growth on April 9.
