WASHINGTON – The United States economy hit significant headwinds during the final three months of last year, with growth falling well short of projections as the lengthy government shutdown and weakened consumer activity took their toll on the nation’s financial performance.
According to the Commerce Department’s Bureau of Economic Analysis, the economy expanded at just a 1.4% annual rate during the fourth quarter – a sharp decline from the robust 4.4% growth recorded in the previous quarter. Financial experts had anticipated a much stronger 3.0% growth rate, though their predictions were made before December trade data revealed the deficit had reached a five-month peak.
The nonpartisan Congressional Budget Office determined that the government shutdown reduced fourth-quarter economic output by 1.5 percentage points due to decreased federal worker services, reduced government purchases, and temporary cuts to food assistance benefits. While the CBO projects most of this lost economic activity will eventually return, they estimate between $7 billion and $14 billion in permanent losses.
Before the economic data was released, President Donald Trump took to social media, stating: “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! Also, LOWER INTEREST RATES.”
The delayed report – held up by the unprecedented 43-day government closure – revealed an economy struggling with what experts describe as a “K-shaped” recovery pattern, where wealthy Americans continue to prosper while working-class families face mounting financial pressures from rising costs due to import duties and stagnant wages.
This economic divide has sparked what analysts and political critics term an affordability emergency. Employment growth remained weak throughout the year, with only 181,000 new positions created – the smallest increase outside of the pandemic era since the 2009 financial crisis and a steep drop from the 1.459 million jobs added in 2024.
Consumer spending, which had surged at a 3.5% rate during the third quarter, showed notable deceleration. Economic researchers indicate that purchasing activity has been concentrated among affluent households, often funded by depleting savings as inflation continues to erode household purchasing power.
Looking ahead, consumer expenditures may receive support from anticipated larger tax refunds resulting from recent tax legislation. Economic analysts estimate that artificial intelligence sectors – including data facilities, computer chips, software development, and research initiatives – contributed roughly one-third of overall economic growth during the first nine months of 2025, helping to offset negative impacts from trade tariffs and reduced immigration levels.
Given the outdated nature of this economic report, financial experts believe it will likely have minimal influence on Federal Reserve policy decisions.
