WASHINGTON (AP) – The U.S. economy, slowed by last fall’s 43-day government shutdown, grew at a slower annual rate of 0.5% from October to December, the Commerce Department reported Thursday, lowering its previous forecast.
The U.S. gross domestic product, the nation’s output of goods and services, slowed in the fourth quarter after posting impressive growth of 4.4% from July to September and 3.8% from April to June. The latest figures were lower than the Commerce Department’s previous forecast for fourth-quarter growth of 0.7%.
Federal spending and investment fell at an annual rate of 16.6% due to the shutdown, 1.16 percentage points below fourth-quarter GDP growth. Personal consumption expanded at a pace of 1.9%, one step slower than the previous forecast of 3.5% in the second quarter.
In 2025 as a whole, the economic growth rate last year was 2.1%, slower than 2.8% in 2024 and 2.9% in 2023.
The economic outlook is uncertain this year as the US-Israel war with Iran has sent energy prices soaring and disrupted global trade.
The U.S. job market slumped last year, posting its weakest employment post-recession since 2002, but 2026 has been full of ups and downs so far. Employers added a massive 160,000 jobs in January, cut 133,000 jobs in February, and created an astonishing 178,000 jobs in March.
Thursday’s report was the Commerce Department’s third and final estimate of fourth-quarter GDP. The first survey of economic growth rates for the January-March period is scheduled for April 30.
