Economic growth in the United States slowed sharply in the fourth quarter of 2025, with gross domestic product (GDP) expanding at an annualized rate of 1.4%, according to advance estimates released by the Bureau of Economic Analysis.
The figure came in well below economists’ expectations of 3.0% growth and marked a significant cooling in momentum toward the end of the year. Analysts attributed the slowdown partly to disruptions caused by last year’s government shutdown, as well as moderating consumer spending.
The advance estimate, issued by the Commerce Department’s Bureau of Economic Analysis, reflected softer household demand and weaker contributions from certain sectors. Consumer spending, which typically drives a large share of US economic activity, showed signs of deceleration after previous quarters of resilience.
The Reuters poll of economists had projected stronger expansion, though the survey was completed before fresh trade data showed the US trade deficit widening to a five-month high in December. A larger deficit can weigh on GDP growth by reducing the net contribution of exports.
Despite the weaker fourth-quarter performance, economists suggest that the slowdown may not signal a broader downturn. Prospects for 2026 are being shaped by expectations of supportive fiscal measures and ongoing investment in artificial intelligence technologies. Tax cuts and increased corporate capital spending, particularly in AI infrastructure and data centers, are projected to provide a tailwind to economic activity this year.
The intersection of fiscal policy and technology investment has become a defining feature of the current US growth outlook. AI-related expansion has driven significant investment in semiconductor production, cloud computing capacity, and advanced research facilities, contributing to business fixed investment.
However, uncertainty remains. Government shutdowns can disrupt public sector operations, delay contracts, and dampen consumer and business confidence. If political gridlock persists, it could continue to influence short-term economic performance.
Financial markets are likely to interpret the weaker GDP reading through the lens of monetary policy expectations. Slower growth may affect projections for interest rates, particularly if inflation pressures continue to ease. Policymakers will be closely monitoring incoming data to determine whether the fourth-quarter slowdown was temporary or indicative of a more sustained moderation.
While the headline growth figure disappointed relative to forecasts, underlying investment in emerging technologies and fiscal stimulus measures could position the US economy for a rebound in 2026, provided macroeconomic conditions remain stable.