US GDP Growth in Q4 2025 at 1.4 Per Cent, Well Below Estimates
Washington (ANTARA) - United States gross domestic product (GDP) recorded annualised growth of just 1.4 per cent in the fourth quarter (Q4) of 2025, well below analyst estimates of 2.5 per cent, according to data released by the US Department of Commerce on Friday (20 February).
The figure also represented a significant slowdown from the 4.4 per cent expansion recorded in Q3, following the federal government shutdown and declining consumer demand that weighed on economic activity.
The release of the data was delayed by one month due to the government shutdown. The Department of Commerce estimated that the shutdown, which lasted through the first half of the quarter, likely reduced economic growth by approximately one percentage point.
On a full-year basis, the economy grew at a rate of 2.2 per cent, down from 2.8 per cent in 2024. Key inflation indicators also showed prices remaining elevated, with the closely watched core personal consumption expenditure price index, excluding food and energy, rising 3 per cent in December 2025 — well above the Federal Reserve's 2 per cent target.
Dean Baker, co-founder of the Centre for Economic and Policy Research, told Xinhua that the shutdown and layoffs at the Department of Government Efficiency (DOGE) were the primary factors behind the weakness.
Prior to the report's release, US President Donald Trump had warned of weakening GDP growth, blaming the partial government shutdown that ended in November.
"The Democrat government shutdown cost the US at least two points in GDP. That's why they did it again, in mini form. No more shutdowns!" Trump said in a social media post, whilst also criticising Federal Reserve Chair Jerome Powell for not cutting interest rates more aggressively.
The central bank had cut its benchmark interest rate by three-quarters of a percentage point late last year but has since signalled a more cautious approach given inflation risks.
Economists remain divided on the economic outlook for 2026. Gary Clyde Hufbauer of the Peterson Institute for International Economics projected first-quarter 2026 GDP at around 2 per cent and full-year growth at 2.5 per cent, with the unemployment rate likely rising to 4.8 per cent from the 4.3 per cent recorded in January.
Baker forecast growth of around 2 per cent but cautioned that the outcome would depend on tariff policies and the performance of the artificial intelligence (AI) sector. He also warned that the bursting of an "AI bubble" could dramatically alter the situation.
Many analysts believe technology shares are overvalued due to excessive optimism surrounding AI developments.
The figure also represented a significant slowdown from the 4.4 per cent expansion recorded in Q3, following the federal government shutdown and declining consumer demand that weighed on economic activity.
The release of the data was delayed by one month due to the government shutdown. The Department of Commerce estimated that the shutdown, which lasted through the first half of the quarter, likely reduced economic growth by approximately one percentage point.
On a full-year basis, the economy grew at a rate of 2.2 per cent, down from 2.8 per cent in 2024. Key inflation indicators also showed prices remaining elevated, with the closely watched core personal consumption expenditure price index, excluding food and energy, rising 3 per cent in December 2025 — well above the Federal Reserve's 2 per cent target.
Dean Baker, co-founder of the Centre for Economic and Policy Research, told Xinhua that the shutdown and layoffs at the Department of Government Efficiency (DOGE) were the primary factors behind the weakness.
Prior to the report's release, US President Donald Trump had warned of weakening GDP growth, blaming the partial government shutdown that ended in November.
"The Democrat government shutdown cost the US at least two points in GDP. That's why they did it again, in mini form. No more shutdowns!" Trump said in a social media post, whilst also criticising Federal Reserve Chair Jerome Powell for not cutting interest rates more aggressively.
The central bank had cut its benchmark interest rate by three-quarters of a percentage point late last year but has since signalled a more cautious approach given inflation risks.
Economists remain divided on the economic outlook for 2026. Gary Clyde Hufbauer of the Peterson Institute for International Economics projected first-quarter 2026 GDP at around 2 per cent and full-year growth at 2.5 per cent, with the unemployment rate likely rising to 4.8 per cent from the 4.3 per cent recorded in January.
Baker forecast growth of around 2 per cent but cautioned that the outcome would depend on tariff policies and the performance of the artificial intelligence (AI) sector. He also warned that the bursting of an "AI bubble" could dramatically alter the situation.
Many analysts believe technology shares are overvalued due to excessive optimism surrounding AI developments.