The U.S. economy saw slower-than-expected growth in last year’s fourth quarter, as it faced disruptions from 2025’s record-long government shutdown and a decrease in government spending.
America’s gross domestic product, which is the nation’s output of goods and services, increased at a 1.4% annual rate in the fourth quarter, the U.S. Bureau of Economic Analysis reported Friday. The bureau also announced that personal spending increased 0.4% month-over-month in December 2025, or $91 billion. This growth matched November’s pace and the market expectations.
Just prior to the bureau’s news release, President Donald Trump blamed the economy’s slower growth on Democrats and Federal Reserve Chairman Jerome Powell. Trump said in a social media post that the Democrats delayed the government’s reopening in October and November, which cost the gross domestic product at least two points. He said Powell’s refusal to lower interest rates contributed to this, as well.
What’s behind the slower economic growth? While consumer spending and investment contributed to the economy’s growth, these were offset by a decrease in government spending and exports, the Commerce Department said. Also, the economy was “K-shaped” during the fourth quarter, which means that upper-income households performed well while lower-income consumers struggled, according to some economists who spoke to the Associated Press. Additionally, as Trump and some analysts blamed the lengthy government shutdown for the slower growth, others pointed to the Trump administration’s tariff policy as a root cause.
What’s currently driving spending? Consumers increased their spending primarily on housing and utilities, financial services and insurance, and healthcare, the department said. There was a decrease in spending on goods, such as motor vehicles, clothing, and footwear. While consumers have kept up their spending, the measure of consumer confidence fell to its lowest level since 2014, surpassing even the low levels during the pandemic.
This story originally appeared in WORLD. © 2026, reprinted with permission. All rights reserved.
