WASHINGTON — The nation’s economic expansion slowed dramatically in the final three months of last year, with the Commerce Department announcing Thursday that growth reached only 0.5% annually during the October-December period, revising downward from an earlier projection.
This represents a significant deceleration from the robust economic performance seen earlier in the year, when the nation’s gross domestic product surged 4.4% in the third quarter and 3.8% in the second quarter. The revised figure marks a reduction from the department’s prior fourth-quarter estimate of 0.7%.
The 43-day federal government shutdown that occurred last fall significantly hampered economic activity, with government spending and investment plummeting at a 16.6% annual rate. This decline subtracted 1.16 percentage points from the quarter’s overall GDP performance. Meanwhile, consumer spending increased at a modest 1.9% rate, representing a decrease from both the previous estimate and the second quarter’s 3.5% pace.
Looking at the full year, the economy expanded 2.1% in 2025, marking a decline from 2.8% growth in 2024 and 2.9% in 2023.
Economic forecasters face uncertainty about the year ahead, as the ongoing U.S.-Israeli conflict with Iran has pushed energy costs higher and created disruptions in international trade networks.
The nation’s employment situation showed weakness throughout last year, with hiring reaching its lowest levels outside of a recession since 2002. However, 2026 has brought mixed signals: companies hired 160,000 workers in January, eliminated 133,000 positions in February, then unexpectedly added 178,000 jobs in March.
Thursday’s data represents the Commerce Department’s final revision of fourth-quarter economic performance. Officials plan to release preliminary first-quarter growth figures on April 30.
