US Fourth-Quarter GDP Seen Revised Down Amid Shutdown Impact

US Fourth-Quarter GDP Seen Revised Down Amid Shutdown Impact

The US economy was reported to have expanded at an annualized rate of 0.5% in the fourth quarter of 2025, following a further downward revision from the earlier estimates of 0.7% and the preliminary reading of 1.4%, according to data attributed to the U.S. Bureau of Economic Analysis. The softer reading suggested that economic momentum may have weakened more than initially thought toward the end of the year, with lower investment activity cited as a major factor behind the downgrade. Despite continued growth, the final quarter appeared to reflect a broader moderation across several key sectors of the economy.

Consumer spending, which remained a central driver of US growth, was said to have slowed more than previously estimated, rising 1.9% compared with the earlier projection of 2.0%. Purchases of goods were reported to have increased only modestly by 0.3%, while spending on services grew 2.7%, indicating households may have become more cautious amid tighter financial conditions and persistent cost pressures. Fixed investment was also revised slightly lower to 1.5%, as a sharp 6.5% contraction in structures weighed on broader capital expenditure. However, investment in equipment and intellectual property products was seen as comparatively resilient, rising 4.3% and 5.4%, respectively.

The housing sector appeared to remain under pressure, with residential investment declining 1.7%, a steeper drop than previously estimated. Trade activity also stayed weak during the quarter, as exports fell 3.2%, marking the largest contraction since the second quarter of 2023, while imports slipped 1.0%. Analysts may interpret the weaker export performance as a sign of softer global demand and lingering competitiveness challenges.

Government spending and investment were reported to have contracted sharply by 5.6%, subtracting nearly one percentage point from overall GDP growth, largely due to the government shutdown during the period. Even with the weak quarterly performance, the US economy was estimated to have grown 2.1% for the full year 2025, suggesting that earlier resilience may have helped offset the softer finish. Market projections indicated growth could improve modestly in the near term, though future performance was still likely to depend on consumer demand, policy conditions, and business investment trends.