Gross domestic produce rose at an annualized rate of just 1.4%
Fourth-quarter U.S. GDP up just 1.4%, badly missing estimate
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Economic growth slowed more than expected near the end of 2025 while inflation held firm, according to data released Friday that could complicate the Federal Reserve’s path on interest rates.
Gross domestic produce rose at an annualized rate of just 1.4%, according to Commerce Department numbers released Friday, well below the Dow Jones estimate for a 2.5% gain.
For the full year in 2025, the U.S. economy grew at a 2.2% pace, down from the 2.8% increase in 2024.
At the same time, inflation held firm in December, according to the gauge most closely watched by Fed officials.
The core personal consumption expenditures price index, which excludes food and energy, rose 3% in December, according to a separate release. That matched the consensus forecast but kept the pivotal inflation measure well above the Fed’s 2% target.
On a headline basis, the PCE index accelerated 2.9%, or 0.1 percentage point higher than expected.
Both indexes rose 0.4% for the month, compared to the respective forecasts for 0.3%.
Just prior to the data release, President Donald Trump warned that the GDP number would be soft, blaming it on the government shutdown that ended in November.
“The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again. No Shutdowns!” Trump said in a Truth Social post. “Also, LOWER INTEREST RATES. “Two Late” Powell is the WORST!!!”
The latter part of the post was a reference to Fed Chair Jerome Powell, who Trump has consistently hectored to lower interest rates. The Fed cut its benchmark rate by three-quarters of a percentage point in the latter part of 2025, but officials have since expressed a reluctance to lower further as they gauge the progress in bringing down inflation against threats of a labor market slowdown.
While Trump blamed the shutdown, the Commerce Department said the deceleration in GDP, which grew at a 4.4% rate in the third quarter, was the result in a pullback in consumer spending and exports.
Personal consumption expenditures, a proxy for consumer outlays, rose 2.4% in the quarter, down from the 3.5% gain in the prior period. Exports fell 0.9% after surging 9.6% in Q3.
