WASHINGTON — The U.S. economy experienced minimal expansion during the final three months of last year, with the Commerce Department announcing Thursday that growth reached just 0.5% at an annualized rate, a reduction from their earlier projection.
The nation’s gross domestic product, which measures total output of goods and services, saw a dramatic slowdown in the October-December period compared to the strong performance earlier in the year. The third quarter had shown robust 4.4% growth, while the second quarter posted 3.8% expansion. Thursday’s revised figure represents a downward adjustment from the department’s prior 0.7% estimate for the fourth quarter.
The 43-day federal government shutdown significantly impacted economic performance, with federal spending and investment dropping at a 16.6% annual rate. This decline subtracted 1.16 percentage points from the quarter’s overall GDP growth. Meanwhile, consumer spending rose 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 deceleration from 2.8% growth in 2024 and 2.9% in 2023.
Economic prospects for the current year remain uncertain following the U.S.-Israeli conflict with Iran, which has elevated energy costs 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, job creation has shown volatility in early 2026, with employers adding 160,000 positions in January, eliminating 133,000 in February, and unexpectedly creating 178,000 jobs in March.
Thursday’s data represents the Commerce Department’s final revision of fourth-quarter GDP figures. The initial report on first-quarter economic performance is scheduled for release on April 30.
