U.S. Fourth-Quarter GDP Revised Lower as Federal Spending Stalls

The U.S. economy, as measured by gross domestic product (GDP), grew at an annualized rate of 0.5% in the fourth quarter, down from the previous Bureau of Economic Analysis (BEA) estimate of 0.7%. The growth marks a significant slowdown from 4.4% in the third quarter and 3.8% in the second quarter.

Claim 30% Off TipRanks

Consumer spending, which accounts for roughly two-thirds of GDP, was revised down to 1.9% from 2%. Amid the government shutdown, federal spending and investment fell at an annualized rate of 16.6%, lowering GDP by 1.16%.

GDP Growth Edges Lower as Energy Costs Rise

Consumer spending and investment were the largest contributors to GDP, while lower government spending and exports dragged it lower. Imports, which are subtracted from GDP, fell. In total, GDP growth was 2.1% in 2025 compared to 2.8% in 2024 and 2.9% in 2023.

The U.S.-Iran war presents another risk to GDP growth, as rising oil and gas prices pressure consumer spending and squeeze household budgets.