Final GDP reading revised down to 0.5%
Economic growth in the United States slowed more than expected at the end of 2025, with newly released data pointing to weaker momentum in the final months of the year.
The Bureau of Economic Analysis said gross domestic product grew at an annualized rate of 0.5% in the fourth quarter. That was below the 0.7% forecast from economists surveyed by London Stock Exchange Group. The figure has also been revised down several times, from an initial estimate of 1.4% to 0.7%, and now to 0.5%.
The slower finish came after a mixed year. The economy shrank by 0.6% in the first quarter, then rebounded with growth of 3.8% and 4.4% in the second and third quarters. Overall, the economy expanded at an annual rate of about 2.1% in 2025.
In the fourth quarter, growth was still supported by consumer spending and business investment. However, declines in government spending and exports pulled the overall figure lower, while imports also fell. The BEA said the latest downgrade was mainly due to weaker investment data, especially a drop in business stockpiles based on updated Census Bureau figures.
A key measure of underlying demand—real final sales to private domestic purchasers, which combines consumer spending and fixed investment—rose 1.8% in the quarter, slightly lower than earlier estimates.
The data were also affected by a partial federal government shutdown from October to mid-November. The disruption delayed the report and weighed on economic activity, particularly through reduced federal spending and delayed pay for government workers. The BEA estimated this cut about one percentage point from fourth-quarter growth, though the full impact is unclear.
Economists had mixed views on the results, as reported by Fox Business.
"Despite a solid 2.1% expansion for the full year, 2025 will likely be remembered as the year that ‘could have been. A rare confluence of supply shocks—tariffs, tighter immigration, and elevated policy uncertainty—constrained activity, leaving growth below what strong organic productivity gains and rapid AI adoption would have otherwise supported. The outlook for 2026 appears even less favorable. The Middle East conflict is set to exacerbate existing headwinds, with higher inflation, weaker real disposable income growth, and tighter financial conditions further weighing on economic momentum,” said Gregory Daco, chief economist at EY-Parthenon.
Bret Kenwell, U.S. investment analyst at eToro, said the final estimate continued a pattern seen in earlier releases.
“The third and final estimate for the fourth quarter came in below expectation—just as the first two readings did. Annualized growth of just 0.5% missed estimates and came in well below economists' original expectation of roughly 2.8% for the quarter. While it was a noisy quarter due to a record-long government shutdown, it's still not an especially reassuring data point given the current backdrop,” Kenwell said.
A more measured view came from Michael Pearce, chief U.S. economist at Oxford Economics, who said the revision was largely driven by a volatile component.
"The downward revision to Q4 GDP is not a major concern as it was driven by the volatile inventory component. Gross domestic income, a better gauge of underlying activity, and gross domestic output of private business showed the core of the economy was still expanding at a healthy pace at the end of last year,” Pearce said.
