US economic growth slows sharply in the fourth quarter

U.S. economic growth slowed more than expected in the fourth quarter of 2025, impacted by the government shutdown and moderate consumer spending.

WASHINGTON, Feb 20 (Reuters) - U.S. economic growth slowed more than expected in the fourth quarter amid disruptions from last year's government shutdown and a moderation in consumer spending, but tax cuts and investment in artificial intelligence were expected to support activity this year.

Gross domestic product increased at a 1.4% annualized rate last quarter, the Commerce Department's Bureau of Economic Analysis said in its advance estimate of fourth-quarter GDP on Friday. Economists polled by Reuters had forecast GDP rising at a 3.0% pace. The survey was, however, completed before data on Thursday showing the trade deficit widening to a five-month high in December.

The economy grew at a 4.4% pace in the third quarter. The nonpartisan Congressional Budget Office estimated the government shutdown would subtract 1.5 percentage points from fourth-quarter GDP through fewer services provided by federal workers, lower federal spending on goods and services and a temporary reduction in Supplemental Nutrition Assistance Program benefits.

The CBO forecast most of the lost output would eventually be recovered, though between $7 billion and $14 billion would not.

Ahead of the release of the report, President Donald Trump posted on social media that the "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."