BEA: US Q4 GDP Up 1.4% as Federal Shutdown Slows Growth

SECAUCUS, NJ (DTN) — The U.S. economy grew at an annualized rate of 1.4% in the fourth quarter of 2025 as a federal government shutdown slowed growth, advance data from the Bureau of Economic Analysis (BEA) showed Friday (2/20).

The latest gross domestic product (GDP) figure marks a sharp deceleration from the 4.4% growth seen in the third quarter. The record-long 43-day government shutdown from the start of October to mid-November was responsible for a third of the 3-percentage point drag between the two quarters, the BEA’s advanced Q4 GDP report showed.

Despite the slowdown, the report highlighted continued expansion in consumer spending and business investment, though these gains were offset by lower government spending and a drop in exports.

Consumer spending on services, particularly healthcare and international travel, was the primary driver of growth. Goods-producing sectors, meanwhile, saw a slight decline in the final three months of last year.

The BEA estimated that real GDP increased 2.2% for the full year 2025, down from the 2.8% annual growth recorded during the previous year.

Inflation indicators were mixed. The personal consumption expenditures (PCE) price index rose 2.9% year-on-year in the fourth quarter. Core PCE, excluding food and energy, however, moderated to 2.7% from 2.9% in Q3.

Market participants remain focused on the Federal Reserve’s next moves, as policymakers weigh the fourth-quarter slowdown against sticky inflation and ongoing trade impacts from the Trump administration’s tariff policies.

Short-term U.S. interest-rate futures were little changed after the release of the latest GDP report as traders stuck to bets of a rate cut in June.