Financial News: U.S. Economic Growth Slows Much More Than Expected

U.S. Economic Growth Slows Much More Than Expected In Q4

02/20/2026 - 10:01:00 (RTTNews)

(RTTNews) - Partly reflecting the longest government shutdown in U.S. history, the Commerce Department released a report on Friday showing U.S. economic growth slowed by much more than anticipated in the fourth quarter of 2025.

The report said gross domestic product climbed by 1.4 percent in the fourth quarter after surging by 4.4 percent in the third quarter. Economists had expected GDP to jump by 2.8 percent.

The Commerce Department noted increases in consumer spending and investment were partly offset by decreases in government spending and exports.

The bigger than expected slowdown by GDP growth compared to the previous quarter reflected the downturns in government spending and exports and a deceleration in consumer spending.

An acceleration in investment helped limit the slowdown along with a smaller decrease in imports, which are a subtraction in the calculation of GDP.

"The temporary shutdown of federal agencies reduced the growth rate by about one percentage point," said Bernd Weidensteiner, Senior Economist at Commerzbank. "However, this effect should reverse in the first quarter."

He added, "As the boost from favorable financing conditions and the boom in artificial intelligence are expected to continue, we still anticipate strong growth in the U.S. economy this year."

On the inflation front, the Commerce Department said its personal consumption expenditures (PCE) price index spiked by 2.9 percent in the fourth quarter after jumping by 2.8 percent in the third quarter.

Meanwhile, the report said the core PCE price index, which excludes food and energy prices, shot up by 2.7 percent in the third quarter compared with a 2.9 percent surge in the third quarter.

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