U.S. economic growth slowed sharply at the end of 2025, with GDP rising just 1.4% annualized in Q4, below the 2.5% forecast, largely due to the record-length government shutdown.

Consumer spending and exports pulled back, while federal government spending fell 16.6%, though state and local outlays rose modestly.

Despite slower growth, inflation remained elevated, with the core personal consumption expenditures index up 3% in December, well above the Fed’s 2% target.

Private domestic demand showed resilience, as gross private investment rose 3.8% and final sales to private purchasers increased 2.4%, CNBC has reported.

For the full year, the U.S. economy grew 2.2%, down from 2.8% in 2024, reflecting both the shutdown’s impact and a moderation from earlier strong growth.